The UK has overtaken China as the second-largest foreign holder of U.S. Treasuries, as total foreign ownership hits an all-time high of $9.05 trillion.
At a Glance
- Foreign holdings of U.S. Treasuries hit $9.05 trillion in March
- The UK surpasses China, now second only to Japan in U.S. debt holdings
- China cuts its holdings to $765 billion, continuing a five-month selling streak
- Japan remains top holder with $1.13 trillion in Treasuries
- Analysts cite trade tensions and diversification as drivers of China’s divestment
A New Global Debt Landscape
In a historic financial shift, the United Kingdom has surpassed China as the second-largest foreign holder of U.S. Treasuries, signaling evolving economic alignments in a turbulent global landscape. As of March, foreign holdings of U.S. debt climbed to a record $9.05 trillion, with the UK’s stake rising to $779 billion—edging past China’s $765 billion.
This $233 billion monthly increase continues a three-month trend of growing foreign investment, suggesting enduring global trust in U.S. financial stability despite rising deficits and political volatility.
Watch a breakdown: UK Surpasses China in U.S. Debt Holdings.
China’s Strategic Retreat
China’s decline in Treasury holdings reflects a strategic shift. With net sales of $27.6 billion in March, Beijing has now reduced its U.S. debt holdings for five consecutive months. The move aligns with its ongoing effort to diversify foreign reserves, investing more in gold and U.S. agency bonds.
Scott Bessent, a former hedge fund executive and Treasury policy advisor, cautioned against overreading the move as aggression: “So if they sell Treasuries, then they would have to sell RMB, and it would strengthen their currency, and they’ve been doing just the opposite.” Indeed, Beijing’s weak-yuan policy underlines that weaponizing Treasuries would be self-defeating.
Japan Stays Steady
While China retreats, Japan remains atop the leaderboard with $1.13 trillion in holdings. Finance Minister Kato Katsunobu emphasized Japan’s intention to maintain these assets, noting their value in trade leverage but denying any plan to liquidate.
The reshuffling of Treasury holders reflects deeper geopolitical undercurrents—from U.S.-China trade friction to the UK’s post-Brexit financial positioning. As global debt portfolios shift, Washington’s bond market remains a cornerstone of international finance, but its buyers are changing.
Whether this reshuffle signals a fleeting trend or a structural pivot remains to be seen. But for now, the message is clear: trust in U.S. debt endures, even if China is taking a step back.
