MICHELE NORRIS, host:
Two weeks ago, we reported that Japan had supplanted China as America's top creditor. Well, it turns out we were wrong. The Treasury Department has revised its data and it now shows that the U.S. government still owes more money to China than any other country.
Adam Davidson with NPR's Planet Money reports.
ADAM DAVIDSON: To be fair, we did say the data was a bit sketchy and would likely be revised. But when those revisions came out, it wasn't even close. The U.S. government owes nearly $900 billion to China and a measly little 765 billion to Japan. We, like the U.S. government, were off by nearly $150 billion.
It turns out, unlike credit card holders, the U.S. government can only guess exactly how much money it owes to different countries and people around the world. Governments generally borrow by selling bonds, which are basically an IOU, and anyone can then sell their bonds on to someone else. The U.S. has very little way of knowing for sure where those bonds ultimately wind up.
China can buy bonds directly from the U.S. government, but like lots of governments, they buy many bonds through middlemen in London. In part, that's just for convenience; Beijing has more daylight hours in common with London than with Washington, D.C. And in part, it's because China, like a lot of countries, doesn't want its citizens to know just how much it's lent to the not-always-popular United States.
Some say we should be reassured that China has lent us so much. They help finance our ever-growing debt and, because we owe them so much, it's mutually assured financial destruction: If China does anything to hurt the bottom line of the United States, then China's $900 billion could be lost.
Adam Davidson, NPR News.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.