In a striking turn of events, the United Kingdom has overtaken China to become the second-largest foreign holder of US Treasury securities, according to the latest data from the US Department of the Treasury.
As of March 2025, UK holdings rose to $779 billion, slightly edging out China’s holdings of $767 billion. This marks the first time since 2000 that the UK has held more US government debt than China — a symbolic shift in the balance of global financial influence.
China’s Steady Retreat, UK’s Steady Rise
As shown in the chart, China’s holdings peaked around 2011 at over $1.3 trillion, but have been in steady decline over the past decade. The reasons behind the pullback range from geopolitical tensions, de-risking from US exposure, and currency diversification strategies. Analysts also suspect that China could be holding additional Treasuries via custodians in Belgium and Luxembourg, making the true scale less visible.
In contrast, the UK’s holdings have climbed steadily, particularly since 2016. However, experts suggest this doesn’t necessarily reflect UK government purchases. Rather, it likely stems from London’s role as a global financial hub, where institutional investors and hedge funds route their US Treasury purchases through UK-based custodians.
Japan Still Dominates
Japan remains the top holder of US Treasuries with approximately $1.1 trillion, maintaining a clear lead over both the UK and China. But as global monetary policy shifts and US fiscal challenges grow, even Japan’s position may be tested in the years ahead.
What This Means for the Global Economy
This reshuffling in the ranks of US debt holders comes amid growing scrutiny of America’s fiscal health. With Moody’s recently joining Fitch and S&P in issuing warnings or downgrades over rising US deficits, the international appetite for Treasuries is being watched closely.
“It’s not just about who holds the most anymore,” said one global strategist. “It’s about why they’re holding it, how long they’ll keep doing so, and what alternative assets might be gaining ground.”
As China repositions its reserves and the UK climbs up the rankings, investors are being reminded that the politics of money matter just as much as the math.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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