TOKYO: Over the past decade there have been plenty of investors worried about the fact that by holding so many US Treasury bonds and notes, China is, in effect, the biggest foreign creditor to the United States.Now they might have to start worrying about Japan.
For the first time since the global financial crisis, the world’s third-largest economy has bumped off China as the largest foreign owner of US government bonds.
China’s slowing economy means it no longer has the same appetite for US bonds, while Japanese investors have been chasing offshore assets at a rate of knots as the central bank devalues the yen.
Currency manipulation was also one of the main reasons China was busy snapping up US debt for so many years.It was deemed to be the only way it could keep the yuan at a lower level. Without that, China would have had skyrocketing inflation and been unable to keep selling cheap goods to the world.
But by keeping the yuan low it created trade tension with the US at a time when the American economy was struggling. Manufacturing in the US took a hit as China flooded the world with cheap goods.
