Creditor Name: Hong Kong
Amount of U.S. Debt Owned (January 2013): $142.9 billion
Percent of U.S. Public Debt (January 2013): 1.2 percent
When British-occupied Hong Kong was handed back to the Chinese in 1997, the free-market enclave became a "special administrative region" of China [source: CIA World Factbook]. Hong Kong remains economically sovereign from China, but depends heavily on revenue from exports to the Mainland.
Hong Kong ships approximately 10 percent of its exports to the U.S., supplying some of America's largest national brands, including Wal-Mart and Target. The U.S., for its part, exports even more goods to Hong Kong in the form of high-value items like aircraft, spacecraft, diamonds, telecommunications equipment and computer processors [source: U.S. Dept. of State]. Because of its close economic ties to the U.S., Hong Kong's economy reacts quickly to American financial upturns, downturns and policy decisions. Like many foreign countries, Hong Kong invests in American debt because it is a reliable security held in the world's most stable reserve currency, the dollar. Sixty-two percent ($3.72 trillion) of the cash held in the world's central banks is in dollars [source: Cox].
Another reason so much U.S. debt is purchased in Hong Kong is because Hong Kong is a major Asian banking center. In fact, 20 percent of Hong Kong's GDP comes from the financial services sector [source: Garcia-Herrero]. That means that investors across Asia use Hong Kong banks to buy U.S. securities. As we'll discuss with our next country on the list, offshore banking makes it harder to tell who exactly owns the U.S. debt.