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Business

China is United States' biggest creditor once again

Just as US President Donald Trump seeks to target Beijing over what he thinks are "unfair trade practices," the Treasury Department has confirmed that China has more holdings of US debt than any other nation.

The Treasury Department reported that China's huge holdings of US government debt soared to a total of $1.15 trillion (980 billion euros) in June, marking a jump of $44 billion month on month.

The rapid monthly rise saw China emerge as the United States' largest creditor again, after Japan had held that position for the previous eight months.

The finance ministry confirmed that China had ranked as the biggest foreign creditor for much of the past nine years.

The enormous sum that the US owes China has accumulated over decades as China keeps exporting a lot more to the United States than it imports from the country, leading to a vast trade surplus.

Watch video 01:41

China's export boom

Growing interdependence

In 2016, the trade volume between the two nations amounted to $578 billion, with China exporting goods to the US to the tune of $347 billion.

Beijing has used large parts of the revenues from its exports to the US and other nations to buy Treasuries while considering the United States as a safe haven for its money.

China's drive to lend huge amounts of money to the US government has not gone down well with many lawmakers and economists in the world's biggest economy who are afraid of Beijing's increasing leverage.

Others believe there's no direct correlation. But with US President Donald Trump talking tough on China again and asking his top trade official to scrutinize China's "unfair" trade practices, experts have warned a potential trade war would be in no one's interest, also considering the two nations' debt relationship.

Watch video 02:04

Exploring US-Chinese economic ties

hg/jd (Reuters, dpa)

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