China threatened to dump US debt this week over the sale of $6.4 billion of American weapons to Taiwan. But, it looks like it’s already started. In December China dumped $34.2 billion in US treasuries making Japan the largest holder of US debt.
Zero Hedge reported:
Gradually we are getting confirmation that Chinese “posturing” about offloading US debt is all too real. The most recent TIC data confirmed the Treasury’s greatest nightmare: China is now dumping US bonds. In December China sold $34.2 billion of debt ($38.8 billion in Bills sold offset by $4.6 billion in Bonds purchased), lowering its total holdings $755.4 billion, the lowest since February 2009, and for the first time in many years relinquishing the top US debt holder spot to Japan, which bought $11.5 billion (mostly in Bonds, selling $1.4 billion Bills) bringing its total to $768.8 billion.
In related news… The foreign demand for US Treasury securities fell by a record amount after China reduced its holding.