The depth of China's investment in the United States is also a reminder of how closely the two economies are linked, and the degree to which any U.S. setback also harms China, which is just emerging from its own very different sort of debt crisis.
This chart is also an important reminder, though, that China is not, as it's so often described, "America's banker." China holds the largest share of U.S. debt but less than a quarter of the total $5.6 trillion in foreign-held debt.
And China's share is not the largest by a very wide margin; Japan has $1.14 billion worth, which is pretty close to China's investment. You might be surprised by that, given how little we talk about Japan's investment in U.S. Treasury securities, versus China's. While we heard a lot of similarly scary rhetoric in the 1990s about how Japan was "taking over" the United States, we've come to accept the idea that Japan investing in our economy is just a financial decision – and a vote of confidence in American wealth – rather than part of any nefarious plot to control us from afar.
When Japan's finance minister urged the U.S. to avoid defaulting on its loans this week, we took it as a serious warning, as opposed to construing as "scolding" the similar sentiments from our "Chinese bankers." Of course, the U.S. has a much friendlier political relationship with Tokyo than it does with Beijing, which goes a long way to explaining why we see it so differently, but China doesn't want to see its investment tank any more than Japan does.
The third-highest foreign holder of U.S. debt is Brazil, with $256 billion. European countries hold about $1 trillion in combined U.S. debt; $1.14 trillion if you include Russia. The largest holder of U.S. debt is, of course, the United States itself; the majority is American-owned.