THE BASIS POINT

China Nervous About Treasury Debt Holdings

China said today asked that “the US maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.” This came after they expressed concern that the new administration is too aggressive about spending which may lead to inflation, which would erode the value of China’s US bond holdings. They’re now the largest US debt holder:

China remained the biggest foreign holder of U.S. Treasuries, after its holdings rose by $12.2 billion to $739.6 billion. That’s the smallest since a $4.8 billion increase in May. Japan, the second-largest holder, reported holdings rose $8.8 billion to $634.8 billion.