In the last reported month Foreign Treasury holdings have gone from 5652.9 to 5653.5 or up only 0.6 billion. Over the last 8 reported months it has gone from 5691.1 to 5653.5 or down 37.6 billion.
If you look at the last 5 reported months China has gone from 1297.3 to 1304.5 but last month it was 1293.8. So last month you could say they were slightly down for 4 months and this is slightly up for 5 months. But China has since said it is No Longer in China’s Interest to Increase Reserves.
Michael Pettis says that If foreigners buy fewer USD assets, the US trade deficit must decline. From this Pettis says that "China Won’t Sell Our Bonds Anytime Soon". Since they have stopped buying bonds, and the US still has a $40 billion per month trade deficit, I think Pettis overlooked something. Seems to me that foreigners can buy up other assets besides bonds. They could be buying land and stocks for example.
I would certainly rather buy US land or US companies or gold than US bonds, given the rate of money creation. It would seem I am not the only one. This is a list of famous US brands now owned by foreigners:
I would certainly rather buy US land or US companies or gold than US bonds, given the rate of money creation. It would seem I am not the only one. This is a list of famous US brands now owned by foreigners:
- Budweiser, now owned by Anheuser-Busch InBev N.V., which is based in Leuven, Belgium
- Alka-Seltzer, now owned by German company Bayer Schering Pharma AG
- Ben & Jerrys, now owned by British-Dutch Unilever
- AMC theaters, now owned by the Chinese
- 7-Eleven, now owned by the Japanese company, Seven & I Holdings
- Woman’s Day Magazine, now owned by the French company, Hachette Filipacchi Médias, S.A
- Purina, now owned by the Swiss company, Nestle
- Gerber, now owned by the Swiss pharmaceutical giant, Novartis
- Firestone, now owned by the Japanese Bridgestone Corporation
- Citgo, now owned by the government of Venezuela
- French’s Mustard, now owned by Reckitt Benckiser, a British conglomerate
- Frigidaire, now owned by Sweden’s AB Electrolux
- The Plaza Hotel in New York City, now owned by Israeli billionaire Yitzhak Tshuva’s El-Ad Group
- Trader Joes, now owned by German billionaires Karl and Theo Albrecht
- Dial soap, now owned by Henkel KGaA, based in Dusseldorf, Germany
- Sunglass Hut, now owned by Italian eyewear seller Luxottica Group
I realize this post is quite old, however I feel it's worth pointing out for anyone else happening across this post that the possibility of foreign purchases of US assets besides bonds is the first possibility Michael Pettis considers in the article you linked. In hindsight, we can see that indeed foreign governments stopped buying US gov't bonds, and shifted purchases to corporate stocks. As Mr. Pettis suggests in his article, the trade deficit was unaffected by this shift. Private investors seem to be a different story, though, and have increased holdings in both US debt and stocks. Basing these claims on Treasury data available from the Treasury's website.
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