China overtakes Japan as largest U.S. creditor with $1.1T owed

Aug. 16 (UPI) -- China has once again become the United States' largest creditor, Treasury Department figures released Wednesday indicate.

China sold off some of its U.S. Treasury bonds last year to prop up its own currency, the yuan, but its holdings of U.S. government debt have increased this year to $1.15 trillion, an increase of $44 billion since June.

The policy means the United States currently owes China more money than any other country. Japan held that position for the past eight months but sold $21 billion of its U.S. treasury bonds in June.

The change in policy comes as China exerts new controls on money leaving the country. The yuan has increased 4 percent in value since the start of this year.

Before Japan took over the top spot, the Treasury Department ranked China as its biggest foreign creditor for the majority of the past nine years. Beijing's readiness to buy the securities, in essence loaning money to the United States, has raised concerns about potential Chinese leverage.

During his 2016 campaign, President Donald Trump often questioned if China has significant power over the United States through its purchased of securities.

Foreign government and individuals' purchases of U.S. securities increased to $35.3 billion in June.