total treasury holdings and since two thousand and eleven china has still added one hundred twenty three billion dollars in treasury billion with a b. yet in two thousand and eleven two and a half years ago we saw this headline from c.n.n. money. china's holdings of u.s. government debt inched lower for a fifth straight month and our very very favorite china trims u.s. bond holdings for fifth month as debt approaches ceiling yes yes that was from may two thousand and eleven made to the has an eleven not this month now here to shed some light on what exactly china isn't is not doing. so his history certainly does rhyme it certainly does right now can you put these numbers into perspective who are some of the largest holders of u.s. debt sure we have a graph here i can with a couple of graphs but the first one shows the largest u.s. holders and if we start with the eight hundred pound gorilla at the right there is no better reserve and they're up to two trillion dollars right now and then if you see japan u.s. individuals and china that's mainland c

china is concerned china is very conscious of the fact that it is holding a lot of u.s. treasuries and china wishes it wasn't in that position in any case so therefore it is consciously trying to move an economy where from the next four to one that is going to be consumer led i mean this is a very important point who previously were seen as the factory of the world's a good producers goods and i think it's great for in u.s. dollars with all of us dollars there's no want to do with it so therefore it has to go and buy u.s. treasuries so which is it wasn't in that position unfortunately it is and it is actively trying to move away from that and trying to make its economy more consumer which is great news for investors who are looking to. supply consumers so it's looking to diversify its funds but it's not the u.s. where else can china park its its huge amount of cash. that's an interesting point gave you china is already doing this because if you have a look at some of the investments that january's making right now a lot of people may not know this but it almost percent of you know

department of treasury china owns over $1.2 trillion in u.s. bonds. >> the u.s.otally understands that we're concerned about the developments in the u.s. fiscal cliff and ask that the u.s. heed the reasonable demand to insure the sof safety of chinese investments. china also understands that president obama and jack lew and the american administration are fully aware of the extreme importance of maintaining american credibility. >> reporter: over the weekend secretary of treasure jack lew went on non-state of the union to rally for a rise in the debt ceiling. >> you can't pay all the bills if congress doesn't raise the debt ceiling. these are not new. this is paying old bills. it would be like someone saying i ran up my credit card and decided not to pay it. you can't do that. the united states government is too important to the world. our currently is the world reserve currenty. >> reporter: economist predicts without a solution a default of loans could cause the dollar to plummet. hurting the economy. that could trickle down to consumer loans from credit cards

china is concerned china is very conscious of the fact that it is holding a lot of u.s. treasuries and china wishes it wasn't in that position in any case so therefore it is consciously trying to move into economy where the next four to one that is going to be consumer led i mean this is a very important point who previously were seen as the factory of the world's a good producers goods and i think it's great for in u.s. dollars with all of us dollars there's no want to do with it so therefore it has to go and buy u.s. treasuries so which is it wasn't in that position unfortunately it is and it is actively trying to move away from that and trying to make its economy more consumer which is great news for investors who are looking to. supply consumers so it's looking to diversify its funds but it's not the u.s. where else can china park its its huge amount of cash. that's an interesting point in china is already doing this because if you have a look at some of the investments that china is making right now a lot of people may not know this but it on the percent of. i mean even around

treasury, china holds $1.28 u.s. bonds. what will the consequences be? china's economy is struggling a little bit. it's a massive debt ceiling. the united states is -- in 1979 we will forget about that. what happened was -- for china, i think they've got a problem. it's not nearly what they claimed it to be. the situation is unstable. so anything that could disrupt global markets including a default by the united states or boehner saying something silly could easily rock the chinese economy. when the chairman of the federal reserve talked about the possibility some tamering the program, that really rocked the chinese markets. so the chinese know how unstable their system is. >> and japan has moved sharply too. and president obama cancelled the visit to indonesia this week for two days of global trade talks to stay in a wa* because of the debt crisis and government shut down. here's what he said about that. i think they lost more than many come theytors think. -- come theytors think. >> whether it's their own international trading organization, with the eu

. >> reporter: japan and mainland china top the list of foreign owners of u.s. treasuries with china holding $1.3 trillion worth as of july. >> well, china has $1.35 trillion in reserves. they have to put it some place. there is not enough gold, pounds or euros. the only place they can put it is in treasuries. >> reporter: the u.s. has flirted with the debt, they avoided a potentially catastrophic debt default. over the weekend the china's news agency didn't mince world replacing the u.s. dollar with a world currency from the spill overof intensifying domestic turmoil in the united states. >> i don't think there is going to be a replacement for the dollar no matter what the politician in washington do, at least not in the short term because there is no other instrument that can fill the void. >> reporter: until there is foreign governments will keep buying u.s. debt even if squabbling politicians in washington turn a deaf ear to their concerns. >> let's go back to the united states senate where we are expecting the end of the cloture vote on the debate, and after that the

as far as china is concerned china is very conscious of the factor that is holding a lot of u.s. treasuries and china wishes it wasn't in that position in any case so therefore it is consciously trying to mormons economy where a problem in the next four to one that is going to be consumer led i mean this is a very important point that china has previously were seen as the the factory of the world's at their core it produces goods and i think it's paid for in u.s. dollars with all of us dollars there's no want to do with it so therefore it has to go and buy u.s. treasuries so which is it wasn't in that position unfortunately it is and it is actively trying to.

china is concerned china is very conscious of the fact that it is holding a lot of you really treasury in china with that margin in that position. so therefore it is consciously trying to move an economy where.

economic disaster china is calling for american lives a world view was twofold would strike a serious blow to the asian powerhouse which sits on a more than eight trillion dollars in u.s. treasuries not china experience and really young says. from its binding burden. to asian is changing because china's surplus and fall income as a reserve is mounting and the us seems to be printing money with no end in sight the us dollar has lost. obvious value we are seeing that china has the special feature a zones to speed up the process of. of the remember the international currency so all signs point to the fact that the renminbi is likely to become fully convertible maybe within a decade reducing reliance on the u.s. dollar has been discussed ever since the credit crunch struck a back in two thousand and eight this hour on r t the kinds of reports assesses china's aspirations of five years. heaping criticism and caustic ridicule on washington the news agency called the u.s. civilian slayer prisoner torture and meddler and others affairs and said the pax americana was a failure on all fronts well i mean china should walk the walk instead of just talking the talk so picked out mcdonald's pi

china is calling full a de americanize world u.s.d. folder would strike a serious pay to the asian powerhouse which sits on more than a trillion dollars in new s. treasuries not china expert andrew leon says beijing is already cutting loose from the binding bridges. the situation is changing because china's surplus and falling down as a reserve is mounting and the us seems to be printing money with no end in sight the us dollar has lost. his value since the fed the reserve was established and there was little return for. investment and then with china's frugal eyes straight there are opportunities open enough in terms of the sources of assets so china has been via versified we are seeing that china has that a special feature a zones in shanghai chen high hong kong to speed up the process of. the remember a i think international currency so all signs point to the fact that the renminbi is likely to become fully convertible maybe within the bank it. reducing reliance on the u.s. dollar has been discussed this is the credit crunch struck back in two thousand and eight later on r t because a report assesses china's aspirations for five years on. keeping criti

if americans want to get off and instead because so many people are moving on to where treasuries is not just china and confront all over the world from all over the world and the crowded individuals are all doing it so therefore it is a very big that america would evolve in its day and of course you know everybody would be affected so consequently you know in this is a learning curve for everyone and you cannot just assume that an asset is one hundred percent safe and there are certain risks associated with it and what china is doing is they're trying to diversify away from where we are just simply u.s. treasuries david kay thank you so much speaking to us from singapore today thank you time talk about u.s. treasuries we spoke to the russian billionaire and head of the biggest al-ameen you produce in the world were sold yes i'm talking about how they got a pascal ferry ample scott space haven't asked him but his take on the u.s. debt situation back to the united states it's a big issue is sort of hanging over everyone not that possible before the markets were relatively stable and have been during

because china is single largest holder of u.s. treasuriesll know, china has 3.5 trillion u.s. in foreign exchange reserves which 1.3 trillion is invested in u.s. government debt. so all of this talk of debt ceilinging government shutdown put damper on china sentiment towards the u.s. across the asia pacific region, japan, other countries, are also large shareholders, large holders of u.s. treasuries. so the default talk actually is upsetting to a lot of the asian countries. >> sure. i'm wondering, what point sentiment and negative sentiment turn into actual action, right? they stop buying as many treasuries. >> that's right. in terms of action, i think it's very difficult for china to diversify outside u.s. treasuries in the near term because the amount of holdings is so huge. on the other hand chinese currency beginning to gain more international prominence. china's international -- china's currency the ninth most traded currency in the world now. 15% of chinese trade beginning to be settled in the rmb. more and more bilateral trade is begi

china. as the chief holder of u.s. treasury bond, china has a lot at stake. close to $1.3 trillion of u.s.exact, is where it is. china is using this disaster to turn out some scathing anti u.s. propaganda and the communist party's mouthpiece "the people's daily" wrote, it is america's arrogance that led to the decision to bypass the united nations and launch a war in iraq and it is the same arrogance that often let's america use domestic policy to kidnap the global economy. another state-run media outlet in china took it a step further, saying, it is perhaps a good time for the befuddled world to start considering building a deamericanized world. joining me now, our rapid response panel, joan walsh, salon.com and goldie taylor, of goldie taylor project and msnbc contributor. well, what an interesting day this has been. joan, you first. this is pretty serious stuff. china is talking about deamericanizing the world. they're certainly not on our side. >> no. >> does this teach our politicians in washington anything? >> i don't know. i don't know that they have -- that the republicans have lea

they lost faith. >> reporter: there are fears china could sell a lot of u.s. treasuries that could spike interest rates sharply higher but those fears are unfounded. >> if the chinese sold a lot of it to someone else, it would push the price down, that the not in someone else's interest. >> reporter: they don't have many choices when it comes to investing large amounts of money. other countries don't have enough debt to buy. >> part of the frustration is they don't have a real easy alternative strategy for doing well in the world, other than holding u.s. financial assets and wanting to collaborate with the united states. >> reporter: sitill, it's clear they are trying to find alternatives. >> i've had private conversation with chinese leaders where instability in terms of bail juju outs, qe is of grave concern to the chinese. >> reporter: concerns that could impact the chinese financially. >>> so what does this mean for the u.s. economy? joining us now with his analysis, simon johnson, he's former chief economist at the international monetary fund and a professor of econ

they lost faith. >> reporter: there are fears china could sell a lot of u.s. treasuries that could spike interest rates sharply higher but those fears are unfounded. >> if the chinese sold a lot of it to someone else, it would push the price down, that the not in someone else's interest. >> reporter: they don't have many choices when it comes to investing large amounts of money. other countries don't have enough debt to buy. >> part of the frustration is they don't have a real easy alternative strategy for doing well in the world, other than holding u.s. financial assets and wanting to collaborate with the united states. >> reporter: sitill, it's clear they are trying to find alternatives. >> i've had private conversation with chinese leaders where instability in terms of bail juju outs, qe is of grave concern to the chinese. >> reporter: concerns that could impact the chinese financially. >>> so what does this mean for the u.s. economy? joining us now with his analysis, simon johnson, he's former chief economist at the international monetary fund and a professor of econ

china and japan the biggest foreign holders of u.s. treasuries. there was an op ed by the china news agency this week saying it is time to consider the de- americanization of the financial world. it is dangerous to leave that with a hypocritical country with dysfunctional elements. they don't have the same universal acceptance as the global benchmark. we might see the start of change as inter-asia trade expands. >> lending and investment. what we can do is try to use domestic currencies like yen. it can be as much is possible to come through those countries and involved countries like china. >> we did see the dollar rising, ¥99. we are trading around 98. >> have a good day over there. we will talk about china. the same subject. at the same time, they are concerned. we will find out exactly what china is thinking. >> with the foreign ministry, they said thursday that the deal not only served the u.s.'s own interest but contributes to economic stability. they said they were also closely following china's exports and investments. >> they will closely

treasuries like china does, like japan does, that option doesn't exist for you because there isn't anothererve currency that's big enough. you can invest in canadian dollars, you can invest in australian dollars but there aren't enough out there to actually substitute for the united states. but there is some danger that interest rates could start to increase, they have already done that. [speaking at the same time] >> you could see a weaker dollar and more expensive exports. >> all of those things could have an effect. so there is real tangible effect on american households if congress does this. which is unfortunate, because the economy sort of is plugging along on its own steam thanks to the federal reserve. we don't need man-made manipulated disasters like this. it would just be better if congress wouldn't fiddle with the economy the way they are doing. >> let's hope -- >> i fully agree with that. i think the danger for american households is those who are really relying on cash payments from the federal government are at risk. if social security checks don't come on time, if medicare r

treasuries for years. >> well, decades, and the chinese leader's may disagree with you, saying in fact it is the u.s. politicians who are to blame for the mess, not them. but yes, chinaas used the u.s. treasury bills to park their money, the trillions they earned in the trade surplus, with the u.s. particularly. the exchange has been such that china's exported goods got cash in return, and then wants a place to put that cash. china has a massive cash surplus, trillions of dollars. it is not just the u.s. treasury bonds part of the picture, they more than double that in the u.s. assets, so this whole period has been difficult for chinese authorities, though it is clear that they will continue to put money in u.s. treasuries because it is a large market, relatively safe, in spite of this wrangling in washington, and also a liquid market so they can move money in and out with some ease. >> exactly, so if china wants to wean itself off the u.s. treasuries, essentially, they're going to have to change their entire economic system. and right now there doesn't seem to be an appetite for that. >> well, certainly nothing that is going to happen in the short or medium term. th

. >> reporter: china holds u.s. treasuries worth over $1.2 trillion. it's the largest foreign holder of u.s. debt. it surpassed japan in september of 2008. and chinese officials have been pushing the u.s. counterparts to take necessary steps behind closed doors. >> translator: china has serious concerns about the fiscal problems in the united states. we need u.s. leaders to secure the safety of chinese investments in treasuries. we've already strongly urged them to take action. >> reporter: this professor of chinese studies at the johns hopkins university says there could be political implications if the u.s. can't fix its finances. >> it's my impression that china has not exerted any open influence or tried to exert open influence on u.s. political behavior. nonetheless, intelligent politicians of course realize that china has this position. and that gives china an enormous amount of de facto power. >> reporter: people in china will be watching to see if u.s. leaders can avert a default in time. ak hiro mikoda, nhk world, beijing. >>> here are the lat

it's kind of too late to exclude them from the investing point of view because if china started selling the treasuries any significant amount you would be used by the media in the end it would send a debt so you think goes right up and. the us budget and deficits would go through the roof quite investors' my panic and then they can and cannot sell off their mind of their bond holding so i would actually think that china understand probably a good part of the u.s. treasury holding their horses as part of their reserve currency reserves they would have provided also eventually for private investors would small amount i don't see any reason why they would want to avoid any treasury exposure to rethink the bond market the treasury bond market and also by the way most of the eurozone sovereign bonds is one of the biggest above result they shouldn't hold gold on the other hand would be a good alternative certainly for private investors china is trying to buy more boards actually in puerto rico than what he does in terms of dollars over the last few years through hong kong they're trying to increase the gold

we see treasury yields continue to de-china. let's get more on the final asian trading session of the week, as well. >> thank you, ross. asian markets, china is revering its gdp growth data. but the nikkei 225 ends down by just a touch after a seven-day winning streak. investors are keeping an eye on the u.s. job status slated to come out next tuesday. south korea's kospi gained 0.6%. meanwhile, australian shares are -- the euphoria end ago five-year high ending higher by 0.75%. now for some winners, on the hong kong bores, sands china shares soared to a record high on better than expected q3 results with net income dropping 89% on the year. this boosted by strong trend at its mccow and singapore operations. numbers show mccow's gambling revenues this year increased nearly 17% from last year. so other gaming stocks also on a hot on streak in today's session. back to you, ross. sixuan, thank you for that. let's get more on china's economy. that was an improvement from 7.5% in the previous thee months. other monthly data was in li

on the sidelines of an asian summit, treasury secretary assured partners. china is the biggest holder of u.s. debt. it holds about $1.2 trillion. > >> fidelity says it no longer holds any u.s. government debt that comes due in late october or early november, around the time the nation could hit its borrowing limit. the nation's largest money manager has been selling government debt holdings over the last couple of weeks. fidelity says it expects the debt ceiling issue to be resolved. that's the good news. but passette manager says it's taking steps to protect investors. bill gross says differently. >> we're doing just the opposite, probably buying what fidelity is selling. i appreciate the problem they have with their money market funds. if, for instance, there's a technical default of a day or even a certain number of hours, then a money market fund possibly has to mark down that debt to zero and it breaks the buck. you know, so money market funds, fidelity money market fund might want to avoid that situation. pimco doesn't have that particular problem. >> and o

if we take simply china and japan, china has $1.4 trillion in ownership of u.s. treasuryhe assets of the people in china. if we defaulted and the value of those treasuries go down, the assets of the peoples bank of china goes down and it effects the economy. $1.1 trillion is owned by the japanese and they have a similar problem. if you put those two countries together, that is 45% of all of the debt of the united states on the outside of the united stat united states, roughly 18 to 20% of all of the debt of the united states. we've already done irreparable harm to kos these countries recognize they cannot hold that much in treasuries. once the crisis is over, they will start to let them out into the market. cheryl: we have been getting a lot of commentary from analysts like yourself. i want to read a quote to you. they are not so worried about any delay with the debt ceiling. here's what they say. in the current case such an outcome would be a far simpler situation for the ratings business when the world's largest and wealthiest countries would be related below those comp

china and japan. america's main foreign creditors and the countries that have the largest holdings foreign holdings of u.s. treasuries that's why they're concerned and that's why china and japan have been urging america to bring about early resolution of this problem if they don't then you know i think over the longer. the dollar will decline and its importance will move towards a multipolar currency system of the currencies will take on board more importance not i think it's going to happen anyway at the global economy is changing there's a shift in the center of gravity from west to east so-called emerging markets economies which i think actually is the wrong but developing developed economies whatever you want to call them are actually already incredibly important for the global economy. will continue to do so over the longer term so these changes that are taking place could easily be accelerated by the problems that we're seeing in america the most economist and former u.k. treasury official neil mckenna thank you very much for your thoughts on the american standstill at capitol hill. now reducing reliance on the

if we can't pay every bill pay treasury note holders first, china, and we'll get to social security recipientslater. lew says that is a dangerous idea. there he is in the glasses and blue tie. he calls it irresponsible, he says the government really shouldn't try to prioritize what it owes because all debt should be treated equal. strangely, if the u.s. does default it could help social security. admittedly this is a weird silver lining. if we turn into the world dead beats interest goes up and social security's investment is in treasuries. so social security would make money on the deal so. this is proof the whole thing is a lot more complicated. some on capitol hill say default would have no effect. there is no historic proof of that because we've never done it. here is another thing that might not work the way you think. u.s., we're freezing aid to europe to show our displeasure there. when it comes to military aid we don't send money, our money is paid to american factories that make humvees, tanks, whatnot. products are sent. as lawmakers point out that is actually costing american1,,ñ j.

treasuries you can say that china is a hedge fund as well because the chinese central bank truckload of these as well so basically when you talk about the underlying premise of it inflating bubble of credit well every official is jewish and which can do this and leverage itself up to the gills is a hedge fund we live in a hedge fund world and that's because we have never dealt with the fundamental problem that we needed to do it which is the excessive date did driven growth the imbalances the entitlements nobody wants to deal with any of those because they. would be a drop in living standards and no politician anywhere in the world wants to go around saying well you know lose thirty forty percent of your living standard so they try to do it by stealth by the mic and that's what we're seeing so the world is full of these hedge funds you're quite correct but it's alright as long as we're all protected they sold it and we pretend that the game can go on oh yeah but the people in greece they can't pretend anymore they're starving to death and they've got neo nazi ism on the rise and ther

treasuries you can say that china is a hedge fund as well because the chinese central bank truckload of these as well so basically when you talk about the underlying premise of it inflating bubble of credit well every official is jewish in which can do this and leverage itself up to the gills is a hedge fund we live in a hedge fund world and that's because we have never dealt with the fundamental problem that we needed to do it which is the excessive date did driven growth the imbalances the entitlements nobody wants to deal with any of those because they. would be a drop in living standards and no politician anywhere in the world wants to go around saying well you know at least city of forty percent if you're living standard so they try to do it by stealth by of the mic and that's what we see so the world is full of these hedge funds you're quite correct but it's alright as long as we're all protected they sold it and we pretend that the game can go on oh yeah but the people in greece they think ampersand anymore they're starving to death and they've got neo nazi ism on the rise and

the treasuries are a very bad long-term wealth holding. and david li is right. chinae looking at the whole asset composition of its foreign assets and start diversifying away from treasuries. >> we have to go, but i want to quickly get your sense as to whether or not you'd agree with something zanny began with. outside of this, the u.s. actually looks remarkably resilient compared with other countries in the world. you have, you know, broad had be been based, slow, but very steady co-rfer ri. that's the tragedy. >> the u.s. economy has survived a massive fiscal tightening. >> the sequester cuts. >> and the whole deal. bts it's about a 3% of gdp tightening now over so the u.s. looks good to me. i'm quite optimistic about the u.s. in the next year or so. >> i might not be quite as bullish as that but i think the u.s. has the potential to accelerate but i worry we've been here again and again and each time things have been messed up and we haven't got beyond this 2% growth. the answer to the question as always will depend on washington. it depends on what they do early n

china from a long-term perspective. their physical cal strategy might be to diversify away from u.s. treasury bills on some level. g enough or safe enough, despite what's going on in washington to hold the enormous amounts of excess cash that china has in its bank account. >> david mckenzie in beijing, where a stiff breeze is clearing away some of the pollution. thanks, david. >>> we'll have a humorous take on the closing and re-opening of the u.s. government. also ahead, we will find out about something a lot more dramatic. what it could be like to conduct chemical weapons inspections in the middle of hostile territory. >>> remember this fiery scene in the skies above russia earlier this year? now scientists say they recovered a piece of that space visitor. details ahead. [ man ] look how beautiful it is. ♪ honey, we need to talk. we do? i took the trash out. i know. and thank you so much for that. i think we should get a medicare supplement insurance plan. right now? [ male announcer ] whether you're new to medicare or not, you may know it only covers about 80% of your part b medical expenses. it's up to you to

but debate in china is the largest holder of the u.s. treasury bonds i mean i understand that it's been bad p.r. for the americans in the asia. towards the dollar how is it reacting now that the deal has been made is i given them a little bit of confidence to say ok things could go back on track. no we won't because we could have another shutdown in three months from now and then we could have another shut down it's a thousand and fifty people go in because the key problem is very is that it to sixteen trillion dollars and up and up and up their business model is unsustainable in fact foreign creditors like china like japan even like brazil with two hundred fifty billion dollars or so u.s. treasury bonds they are financing the american war machine in fact those drones that you see killing a push to use in the tribal areas the air system we find this by foreign money the united states would have to review his the whole economic financial policy in fact which is still a single capitalism driven by well three there was a crisis in two thousand and e

international financial concerns puts it in the backstop and you have treasury officials backpedalling saying we'll take care of this, ameliorate china these people about this problem, that's a huge effect right here. not to mention long-term loss of confidence in the dollar and u.s. treasuries. >> the dollar has held up primarily because the rest of the world was in such bad shape. you can't, you know, bet on that forever. i want to play for you congressman, republican from florida, talking about his view of how the debt ceiling works. lets watch. >> many nonpartisan economists biggest banks in new york say you fail to raise the debt limit it will be a catastrophe for the world economy. it doesn't convince you? >> i'm not convinced that's true. i've talked to economists and read a lot of articles on this and talked to bankers. we're not going to go into default. so raising -- hitting the debt ceiling doesn't equal defaulting. >> now, it's true hitting the debt ceiling does not equal default but should we turn to congressman yoho from florida to tell us how to run the economy and debt ceiling. >> you know, andrea, over the course of