Jakarta –
The deadline for the United States (US) to pay debts is getting closer, namely June 5. China and Japan are also monitoring US developments with great trepidation.
The two countries are the largest foreign investors in US government debt. China and Japan have US$ 2 trillion or IDR 30,000 trillion (exchange rate of IDR 15,000) of IDR 11,400 trillion in US Treasury securities held by foreign countries.
US Treasury securities are government bonds issued by the US Department of the Treasury for federal government spending other than taxes. Beijing began increasing purchases of US Treasuries in 2000, when the US backed China’s entry into the World Trade Organization sparked a boom in exports.
The activity generated huge amounts of dollars for China and needed a safe place to store them. US Treasury Bonds are widely considered to be one of the safest investments on Earth.
China’s holdings of US government debt ballooned from US$101 billion to US$1.3 trillion in 2013. China was the largest foreign creditor to the United States for more than a decade.
But escalating tensions with the Trump administration in 2019 saw Beijing reduce its holdings, and Japan overtook China as the top creditor that year. Tokyo now holds US$1.1 trillion, compared to China’s US$870 billion
That extraordinarily large amount makes China and Japan vulnerable to a potential fall in the value of the US Treasury if a doomsday scenario for Washington occurs.
“Japan’s and China’s large Treasury holdings could hurt them if Treasuries value plummeted,” said Josh Lipsky and Phillip Meng, analysts with the Atlantic Council’s GeoEconomics Center.
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2023-05-27 06:29:40
#Threatened #Default #Debt #Japan #China #Worried
