FOR eight years after the United States resumed running large budget deficits in 2002, China was the largest lender, buying a fifth of the new Treasury securities sold during that span — an expenditure of more than $900 billion. During 2006, China financed more than half the American deficit. When the financial crisis struck hardest, China spent more than $100 billion on Treasuries over the two-month period of September and October 2008.
But over the last year, China has been a net seller of Treasury securities, according to figures released this week by the American government. If that is true, it would be extraordinary, considering the size of the bilateral trade deficit, and there has been speculation that China has been purchasing Treasuries through accounts in other countries.
The Treasury Department estimated that China reduced its holdings of Treasuries by nearly $11 billion in November alone. For the 12 months through November, as the accompanying charts indicate, China reduced its holdings of Treasuries by more than $36 billion.
The Treasury issues separate estimates for China and Hong Kong, but they are combined for purposes of the charts and this article.
The Treasury figures indicate that over the eight years from the beginning of 2002 through the end of 2009, the total amount of United States government debt outstanding — not counting securities owned by other agencies of the American government, like the Federal Reserve and the Social Security Administration — rose by $4.4 trillion, to $9.3 trillion.
Of that, China provided about a fifth and other foreign countries provided two-fifths. The remaining 40 percent was purchased by Americans, although for a time in the middle of the decade, Americans were selling Treasuries even though the government was stepping up its borrowing.