Foreign demand for US securities weakened in May as the country hit its borrowing limit, but China increased its holdings for the second month in a row, the Treasury said Monday.
Net foreign buying of US long-term securities in May incoming foreign investment less outgoing US investment in foreign debt fell by 23 percent from April to $23.6 billion.
The weaker demand for US debt came as the US government hit its legal borrowing limit of $14.3 trillion on May 16.
Since then the government has been able to juggle finances to keep operating without defaulting on debt or slicing spending, as a political battle rages over whether Congress should raise the limit.
Unless the limit is raised by August 2, though, the Treasury says, growing commitments could force a default.
China, as the biggest investor in the United States, is being closely watched for shifts in its demand for US debt.
For the second month in a row, China increased its Treasury holdings, to $1.16 trillion in May from $1.15 trillion in April.
Japan and Britain, the second- and third-largest foreign buyers of US debt, also raised their holdings, the data showed.
Japan's investment of $912.4 billion was up by $5.5 billion from April.
Britain increased its holding by $13.5 billion, to $346.5 billion.