Germany edged out China as the world’s second-largest supplier of external credit for the first time in at least a decade last year as the Asian nation’s authorities spent up big to support a weakening yuan.
China’s net foreign assets fell to $1.6 trillion at the end of last year, while Germany’s rose to $1.62 trillion, according to calculations by Bloomberg using Japan’s Ministry of Finance data. Japan, the top creditor since 1991, remained the biggest with $2.82 trillion.
The shift underscores the global implications of last year’s turbulence in China, where almost $1 trillion of capital is estimated to have fled with the central bank burning through $513 billion of its foreign reserves to prop up its currency. Yet it’s likely a bump in the road rather than a reversal in fortunes, with China set to eclipse Japan to become the world’s largest net creditor in coming years, according to the Brookings Institution.