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China holds 7pc of US debt, not sure what Saudis owe, China seen as villain

DESPITE Saudi Arabia declaring war on US shale, China takes the brunt of the criticism for a manufacturing policy Washington created in favour of US corporations decades ago, with China seen as to blame for US job losses, although, US industry leaders took the decision to go down the offshoring path.

When it comes to US debt, China is the one country singled out for owning too much of it. Saudi Arabia's holdings of US Treasury debt, meanwhile, are a mystery, reported Forbes.

While China comes under the microscope, Saudi Arabia has benefited from an unspoken hands-off policy. Americans only got a whiff of how much the Saudis owned in US assets when its government said it would sell US$700 billion worth, if US President Barack Obama disclosed the findings of a September 11, 2001 report, alleging Saudi support of the Boston Logan Airport hijackers.

Americans, asked who holds more American debt, will tell you it's the Chinese. But China holds less US debt than one might imagine, and their interest in US economic growth across a wide section of the US economy makes China money more important to the US than Saudi money, according to the authors of the report.

When asked to rank the most serious problem facing China-US relations, 67 per cent said China's position in US Treasury was "very serious". Manufacturing came in second in the "very serious" category with 60 per cent saying so, according to a September survey by Pew Research Centre.

Republican presidential candidate Donald Trump has called out China for dumping steel onto world markets and on trade relations. For his part, Mr Trump also said he would consider halting Saudi oil imports, which are not a major source of US crude, if it did not fight against the so-called Islamic state.

China is the single largest foreign buyer of Treasury debt with $1.4 trillion in US bonds. Americans have no idea how much the Saudis own, but are consistent in their worries about China.

As of March 2016, the US government owes $19 trillion to creditors in both long and short-term debt. China owns a very small portion of that.

However, no one outside of the US Treasury Department knows what the Saudis own. Assuming they owned all of the oil exporting states' position in US debt, it would come in at $290 billion, which is equal to about half of Saudi Arabia's foreign reserves, according to the International Monetary Fund as of February.

America owes China at least $1 trillion and that's unlikely coming down. China's ownership of seven per cent of the national debt gives it a vested interest in America's prosperity, not leverage to do it harm.

Different than Chinese companies now coming to America, Saudi Arabia remains a one trick pony. Their money goes to certain sectors of the economy, and its wealthiest investors are not investing in job creation like the Chinese.