Top 10 Countries the U.S. Owes Money To

A Shanghai skyline at dusk. China is the U.S.'s largest foreign creditor, owing more than $1 trillion of U.S. debt. iStockphoto/Thinkstock

Creditor Name: China

Amount of U.S. Debt Owned (January 2013): $1.26 trillion

Percent of U.S. Public Debt (January 2013): 11 percent

With 1.3 billion people, the world's second-largest economy, and the fastest economic growth among industrialized nations, China is an undisputed economic powerhouse [source: World Bank]. China is also the foreign country that owns the most U.S. debt, breaking the trillion-dollar mark in 2011 and never looking back [source: CBS News]. The question is: is it bad for the U.S. economy or national security that one of America's biggest rivals owns more than 10 percent of its debt?

You might compare it to the arms race between the former Soviet Union and the United States during the Cold War. Sure, either side could have launched its warheads and inflicted terrible damage on the enemy, but an act of aggression would have ensured an equally punishing retaliation.

If China wanted to economically injure the U.S. by selling off its debt securities, the result could be dramatically higher interest rates and a steep devaluation of the dollar. But the Chinese would also shoot themselves in the foot. The Chinese have close to half of their cash reserves invested in U.S. debt [source: Davidson]. For China, it's the safest, best investment the growing nation can make. China's economic growth is fueled partly by the return on their U.S. investment. Poisoning the dollar would take the yuan right down with it [source: Capaccio].