UK surpasses China to become second-largest foreign holder of US Treasuries at $779 billion

UK surpasses China to become second-largest foreign holder of US Treasuries at $779 billion

In a significant shift in the global financial landscape, the UK has surpassed China to become the second-largest foreign holder of U.S. Treasury securities. According to data released by the U.S. Department of the Treasury in March 2025, the UK's holdings increased by $29 billion to $779.3 billion, moving into the second position. This development marks a notable change in the top three foreign holders of U.S. Treasuries, as Japan remains the largest holder with $1.1308 trillion in holdings, and China now occupies the third position with $765.4 billion [1].

The report, part of the Treasury's International Capital (TIC) series, highlights that China's holdings decreased by $18.9 billion, marking the first reduction in its holdings this year. This reduction follows a general downward trend observed since April 2022, when China's holdings were consistently below $1 trillion. Japan, on the other hand, increased its holdings by $4.9 billion, maintaining its position as the largest holder.

The overall trend shows a net inflow of $254.3 billion into U.S. long-term and short-term securities and banking flows in March 2025. Overseas private funds contributed $259.2 billion, while official funds showed a net outflow of $4.9 billion. This dynamic highlights the continued interest in U.S. Treasuries as a safe haven asset, despite recent market volatility.

This shift in holdings reflects broader geopolitical and economic factors at play. The UK's increased holdings may be influenced by its strategic positioning within the global financial system, while China's reduction could be attributed to its ongoing efforts to diversify its foreign exchange reserves.

References:
[1] https://www.gurufocus.com/news/2871812/japan-and-uk-increase-us-treasury-holdings-china-reduces