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Why is the US debt to China so huge, US $1.063 trillion?Mostly the USD lands in China as Trade Surplus. China’s trade surplus with the US has been running at $300 - $500 billion a year, according to the US Census Bureau, so that $1 trillion debt is really only about 2 - 3 year’s worth of trade surplus. That’s not much.U.S. Trade with ChinaTrade in Goods with China Available years: 2021 : U.S. trade in goods with China NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding. Table reflects only those months for which there was trade. Month Exports Imports Balance January 2021 12,860.9 39,111.2 -26,250.2 TOTAL 2021 12,860.9 39,111.2 -26,250.2 2020 : U.S. trade in goods with China NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding. Table reflects only those months for which there was trade. Month Exports Imports Balance January 2020 7,215.3 33,280.6 -26,065.3 February 2020 6,815.0 22,813.1 -15,998.1 March 2020 7,971.9 19,805.4 -11,833.5 April 2020 8,604.7 31,070.8 -22,466.1 May 2020 9,641.7 36,598.2 -26,956.5 June 2020 9,242.2 37,639.5 -28,397.2 July 2020 9,037.0 40,657.3 -31,620.2 August 2020 11,036.1 40,816.4 -29,780.4 September 2020 11,536.8 41,208.3 -29,671.6 October 2020 14,723.0 44,828.0 -30,105.0 November 2020 14,179.3 44,855.5 -30,676.2 December 2020 14,645.5 41,875.9 -27,230.4 TOTAL 2020 124,648.5 435,449.0 -310,800.5 2019 : U.S. trade in goods with China NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding. Table reflects only those months for which there was trade. Month Exports Imports Balance January 2019 7,105.1 41,514.4 -34,409.3 February 2019 8,083.3 33,154.9 -25,071.6 March 2019 10,574.9 31,175.6 -20,600.6 April 2019 7,883.0 34,682.7 -26,799.6 May 2019 9,069.4 39,173.4 -30,103.9 June 2019 9,166.7 38,967.6 -29,800.9 July 2019 8,694.3 41,449.2 -32,754.9 August 2019 9,415.6 41,151.1 -31,735.5 September 2019 8,597.3 40,165.5 -31,568.2 October 2019 8,851.2 40,114.9 -31,263.7 November 2019 10,103.3 36,436.6 -26,333.3 December 2019 8,903.0 33,665.5 -24,762.6 TOTAL 2019 106,447.3 451,651.4 -345,204.2 2018 : U.S. trade in goods with China NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding. Table reflects only those months for which there was trade. Month Exports Imports Balance January 2018 9,910.2 45,749.9 -35,839.7 February 2018 9,741.8 39,003.6 -29,261.9 March 2018 12,653.2 38,295.1 -25,641.9 April 2018 10,510.5 38,269.4 -27,758.9 May 2018 10,396.6 43,938.7 -33,542.0 June 2018 10,858.3 44,571.2 -33,712.9 July 2018 10,156.5 47,087.6 -36,931.1 August 2018 9,280.9 47,817.5 -38,536.6 September 2018 9,732.4 49,988.1 -40,255.7 October 2018 9,187.5 52,170.1 -42,982.6 November 2018 8,650.9 46,445.7 -37,794.8 December 2018 9,210.5 45,906.3 -36,695.9 TOTAL 2018 120,289.3 539,243.1 -418,953.9 2017 : U.S. trade inhttps://www.census.gov/foreign-trade/balance/c5700.htmlThen the Chinese banks switch out the cash and switch in US Treasuries, to get a bit of yield. Thus it shows up on the Fed ledger as “debt held by foreign entities (China)”.But the big picture is that the entire “foreign holding of US Treasuries”, on a percentage basis, has been dropping since 2013 - 2014, Foreign purchase of US debt has not kept up with debt issuance.and China, in particular, has been slowly selling the US Treasuries for years, steadily. Basically it’s been switching out dollar and switching in yen and euro, because of changing trade patterns.Source:Who Bought the $4.5 Trillion Added in One Year to the Incredibly Spiking US National Debt, Now at $27.9 Trillion?Someone had to buy every dollar of this monstrous debt. Here’s Who. The Fed isn’t the only one. But China continues to unwind its holdings.https://wolfstreet.com/2021/02/17/who-bought-the-4-5-trillion-added-in-one-year-to-the-incredibly-spiking-us-national-debt-now-at-27-9-trillion/The vast majority of the US debt is held by US entities. Even some seemingly “foreign holdings” are in fact US entities using offshore tax havens. For example, Ireland which is the US tech companies’ favorite tax shelter, holds $300 billion US Treasuries. Cayman Islands, with a population of ~ 60,000 people, holds $200 billion US Treasuries. Why? ’Cause Cayman is the biggest US hedge funds domicile.As Mr. Sutton said, the vast, vast majority of the US debt is held by US entities. China holds less than 4% of the US debt.

What's the historical background of China's debt problem? Who should be responsible for it?A2A. The “historical background” of China’s debt problem is a former Fitch “star analyst” Charlene Chu, who published her “research note” since 2008 saying that China’s debt explosion could lead to a financial crisis. She became a “star” because of it, became recognized as a famous “China expert”, and she has been saying the same thing every since. Getting close to a decade now.The interesting thing is that 2008 was the year the US subprime market blew up, sending the whole world into recession. Subprime mortgage crisis Fitch was one of the three top credit rating agencies that gave all those subprime mortgages triple-A ratings at the time. The Public still don’t know how this could have happened, but 2008 was a year where there was tremendous appetite for this kind of “bad debt” stories. So her timing was impeccable. The other interesting thing is that Ms. Charlene Chu, despite her last name, was born in Colorado, does NOT speak one word of Chinese, despite being known in the Street as “the only one who understands China’s banking system”.2012: Has the Chinese Economy Bottomed Out?: Michael Pettis2013: Fitch says China credit bubble unprecedented in modern world historyCharlene Chu Is the 'Rock Star' of Chinese Debt Analysis2014: The dark economic thoughts of Charlene Chu ;Is This the End of China's Economic Miracle?2015: How analysts calculate China's true — and huge — burden of bad loans | The Japan Times2016: ‘Massive Bailout’ Needed in China, Banking Analyst Chu SaysChina Banks Guru Warns of Bad Debt Reckoning2017: Subscribe to readThe Chinese government may have been paying attention to her warnings, but if so, it has not been translated into action, until about a years ago.But then, the US has even worse total debt situation.And neither the US nor China is too far away from the global average.Now if you look carefully at the COMPONENTS of the debt, both Japan and the US have large “Government debt”. the US has large “Household debt”. China has large “Non-financial corporate debt”. (Let’s ignore the UK for now, since that giant “Financial debt” on the UK chart is mostly because London is the domicile of most of the major banks in the world.) These came about very differently.Japan’s large “Government debt” came from the asset bubble in the 90’s, and the Japanese government decided to take a lot of that onto its own book, and take it off the bank’s book, so that the Japanese banks can sorta have a “fresh start”. The US has large “Government debt” because of the astronomically expensive foreign wars.The US also has large “Household debt”. Household debt is basically consumer debt and mortgage. It’s on the individual household. It’s not backed by the savings. If one gets sick, or loses his job, he can either declare bankruptcy, go live in the street, or jump off the Empire Building.China’s “non-financial corporate debt”, to a great extent, is a product of the very high saving rate. Basically, the Chinese saves half of their income, deposits it in the bank, and the bank lends it out to promising companies to expand their operations.You see all that savings? Yeah, all that money has to go somewhere. So the average Chinese Joe deposits 10,000 Yuan a month into his bank account. The PBOC gives him 1% interest, and lends the money out to, say, National Construction Co. for 1-year loan at 6%, pockets the 5% margin. There, you’ve got 10,000 Yuan corporate debt created out of somebody’s savings. And why is China’s “non-financial corporate debt” growing? Well, how else can you quickly implement industrial transformation and move up the value chain? And how else can you quickly capture foreign industrial markets through export and OBOR? So basically what’s happening in China is that the Chinese banks are transforming savings into credit to push these industrial policies at a very rapid rate. Ms. Chu may be predicting gloom and doom for a long time, but the lesson that the Chinese government is learning, is that these credit must be used wisely and get the most bang-for-the-buck. So they’ve been cutting capacity in older industries, deleveraging in certain sectors, while expanding credit in other, more strategic sectors. If you put a brake on that credit quickly, you WILL be putting a brake on industrial growth to a certain extent, so it makes sense to take your time and go through the loan portfolio with a fine comb, and be very targeted and precise in your approach. China's Credit Data Show Signs Deleveraging Is Starting to Bite So you see, it’s a fine balancing act.Ms. Chu, and analysts like her, is a useful part of the Capital Market. You see, most investment banks have a “market-neutral” position, which means that they make money when the market is going up, and they make money when the market is going down. They are the “house” in the gambling den. The “winners” get their payout from the losers, not from the “house”.The “house” makes money from transactions. So they employ a handful of “hawkers”, a.k.a., “analysts”. The guys who talk up the stocks will generate business from the buyers and call options, and the guys who talk down the stock will generate business from sellers and shorts. The “house” doesn’t care if you win or you lose. It just wants you to gamble, and gamble a lot. Lots of transactions this way. So the larger picture is that the substance of these “research” doesn’t matter very much. What’s important is that these “research” must have mass appeal to those who gamble in the capital market, so you can move the market and cause a lot of transactions. Seriously, if these “researches” indeed offer you unique insight, beyond that of the ordinary guys in the street, why is it that the guys who use these researches to guide their investment rarely beat the market? 99% of actively managed US equity funds underperform; Fund managers rarely outperform the market for longIt’s actually a bit bizarre - you’d only go back to your tipster if his tip on the horse race gives you a nice windfall, but with “market analysts”, people will go back to the same tipsters no matter how their bets turn out. The same with lousy movie stars and lousy politicians. It’s like that Fawlty Towers episode, you can have “duck with orange, duck with cherries, or "duck surprise" (duck without oranges or cherries)”. "If you don't like duck... then you're rather stuck!" Gourmet Night This, my friend, is what a Monopolized Channel looks like.

They are held to the same standards. The relevant standard is public debt as a percentage of GDP. You can see how countries fare in this overview: National debt in EU countries in relation to gross domestic product (GDP) 2017 | Statistic. In fact this ratio should not be over 60% as mandated by Art. 126 TFEU and the countries you mention are among the remaining minority in compliance.Obviously you’re rather talking about total external debt, which is not a relevant criterion for the Eurozone as it has little to do with the stability of the EUR. In fact the total external debt is rather an indication of the size of the financial industry in comparison to total size of the economy than anything else.Luxembourg and the Netherlands are home to financing activities of multinationals for their tax regimes that don’t penalize leverage as some industrial countries do and Luxembourg also offers a very friendly legal regime for securatisation and has also has the largest market for debr securities in any European country. So there are many companies domiciled there simply for issuance of debt securities to the international capital markets that inevitably drive that number up. In fact Luxembourg is fascinating as it probably has the biggest divergence between minuscule public and huge private debt.The latter however is of relatively little concern for a currencies stability.