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America, Let’s Face It: China Owns Us

Written by Mint.com
Published Apr 19, 2010
2 min read
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The national debt has been making its way into the headlines a lot as of late. Much of this attention has been underscored by a grumbling, a recession-weary U.S. population forced to re-examine their spending habits even as the government maintains record federal deficits.

One of the latest news flashes to spark public concern is China’s continued dominance as the largest foreign holder of U.S. Treasury debt. According to the U.S. Treasury Department’s annual benchmark revisions, China’s holdings of U.S. Treasury securities stood at $894.8 billion at the end of December 2009, keeping it in its first place position followed by Japan which holds $768.8 billion.

Over the last year or so, there’s been a lot of brouhaha over China’s holdings, its “econo-political” maneuverings, and what this all means for the average American. But all of this is pretty complicated and abstract–especially for those of us who don’t hold a degree in economic policy.

So I set out to make China’s U.S. debt holdings somewhat more tangible. Here’s what I found:

China’s holdings as a percentage of national debt:

Our current national debt is approximately $12.557 trillion. Thus, China’s total treasury holdings represent 14% of America’s total debt obligations and 24.3% of total foreign ownership of U.S. Treasury Securities.

How the money we owe China compares to the federal budget:

Total estimated expenditures for FY 2010 came to $3.552 trillion; while total estimated revenues for FY 2010 were $2.381 trillion. That works out to 25% of total US expenditures and approximately 37.5% of total yearly revenues.

How much we owe China per capita?

The estimated population of the United States is now 307,966,334 (and counting). That works out to approximately $2905 per person. Thus, the average family with two children collectively owes $11,622 to China.

How much interest are we paying China per year? Per Day?

The US treasury offers a range of securities that mature within set time periods (i.e. 1,5, or10 years) with the longest held securities maturing in 30 years. Though yields vary depending on the length of the security, the majority of China’s holdings are long-term. Currently, the interest rate offered on long-term securities is approximately 4.5%. We can therefore calculate a rough estimate of $40.26 billion in interest paid per year or $110.3 million a day.

How does China’s debt holdings compare to health care industry profits?

The health care industry is one of the biggest industries in the US, constituting a 5th of the Gross Domestic Product (GDP). The profits of five largest US health insurance companies were a mere $12.2 billion in 2009!

Zaijian, America!

America, Let’s Face It: China Owns Us! provided by fastupfront.com.