China lends money to the US government by buying its debt. Official figures put China’s US debt at $591 billion in August, down from $700 billion a year earlier. This was the lowest level in 18 years.
But these figures may not show everything. China may keep some US debt with banks in Canada and Europe. The figures may link this debt to those countries, not China. US debt holdings in Canada and Belgium have grown sharply.
Expert Brad Setser thinks US money and investments still make up 50–55% of the money and investments China keeps in reserve. So China may still hold much more in US money and investments than the debt figures suggest.
