- By Jerome ChenJerome Chen is a researcher at Foreign Policy.
Good news for those of you who answered “China” on question 7 of the current FP Quiz: Your instincts are now correct. At the time of publication, U.S. Treasury data still showed that Japan held the most U.S. treasuries of any country. But new figures reveal that China has now taken the top spot. China increased its holdings to $585 billion in September, compared with $541.4 billion in August. Meanwhile, Japan shaved its holdings from a high of $600.7 billion in March of this year down to $571.4 billion in September.
The October figures will be even more interesting, though. Aside from the $585 billion, China was holding some $400 billion in Fannie Mae and Freddie Mac debt. With the acquisition of the two mortgage lenders by Hank Paulson, American Taxpayers, et al., China announced it would decrease its dollar holdings to diversify its foreign reserve portfolio. How much did China help fund the $700 billion TARP program? We’ll know soon.
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Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and a senior editor at The National Interest. Prior to Fletcher, he taught at the University of Chicago and the University of Colorado at Boulder. Drezner has received fellowships from the German Marshall Fund of the United States, the Council on Foreign Relations, and Harvard University. He has previously held positions with Civic Education Project, the RAND Corporation, and the Treasury Department.| Daniel W. Drezner |