Fannie Mae and Freddie Mac may not have many friends these days, but they should be able to count on a certain loyalty in Beijing. China is the biggest foreign holder of debt issued by the troubled enterprises and a relatively captive buyer of the paper.

US Treasury data shows that mainland Chinese investors owned $376bn of agency long-term debt at the end of June last year, almost one-third of total foreign holdings of the agencies. Virtually all of this is probably held by an agency under the central bank which oversees the bulk of reserves. Extrapolating on the basis of China’s growth in foreign assets, economist Brad Setser reckons the country now holds $500bn-$600bn worth of agency paper, or a 10th of the outstanding stock of agency debt.