When I read this transcript from Fareed Zakaria this bit leapt out at me:
The Chinese are by far the largest holders of American debt, for example. They buy billions of dollars’ worth of American Treasury bills every week.
Now perhaps Mr. Zakaria is engaging in a masterful piece of misdirection by conflating debt with American Treasury bills but, assuming he means U. S. public debt he’s flat out wrong.
Here’s the most recent version from the Treasury Department of foreign holders of U. S. securities. Japan, with $593.4 billion is the largest holder, with mainland China at $518.7 billion second. If you combine China and Hong Kong, the figure is $579.3, still not by far the largest. If you add Taiwan’s $40.2 billion, you arrive at $619.5, more than Japan but not by an amazing amount.
Here’s the data (from April) on foreign holders in pie chart form:
But that’s misleading, too, since it only looks at foreign holders of U. S. debt. Here’s the corresponding pie chart for all holders:
You can click on either image for a larger version.
The total U. S. public debt is about $9.7 trillion, China’s holdings about $502 billion of that or roughly 5% of the total. An accurate re-statement of Mr. Zakaria’s statement is
The American people are by far the largest holders of U. S. public debt and the Chinese hold about 5% of U. S. public debt.
That’s still a heckuva lot of money but, if we’re going to discuss the subject sensibly, we should probably leave the hyperbole and half-truths aside.