Washington D.C., August 2025 – Foreign holdings of US government debt reached a record USD 9.13 trillion in June 2025, highlighting global reliance on American financial instruments. Yet beneath this milestone lies a shifting geopolitical landscape, as India and China—the two major BRICS economies—strategically reduce their US Treasury positions.
Data from the Treasury International Capital (TIC) System, managed by the US Department of the Treasury, shows that China’s holdings have fallen to USD 756.4 billion, down from a peak of USD 1.1 trillion in 2021, marking a 31.2% reduction. Similarly, India’s stake decreased from USD 241.9 billion in January 2025 to USD 227.4 billion by June—a USD 14.5 billion retreat. Experts say these reductions go beyond routine portfolio adjustments, suggesting deliberate policy shifts amid rising trade tensions.
The pullback coincides with the Trump administration’s aggressive trade measures, including a 145% tariff on Chinese goods and a 25% tariff on Indian imports, with the potential to double to 50% for continued Russian oil purchases by India. Beijing and New Delhi have publicly criticized these tariffs, labeling them as “unfair” and threatening retaliatory measures.
Japan, in contrast, has capitalized on the volatility, increasing its holdings to USD 1.147 trillion, surpassing China to become the largest foreign holder of US debt. Japanese Finance Minister Katsunobu Kato hinted that Tokyo’s move is a strategic maneuver, reinforcing its position as a reliable US ally.
Other foreign investors, including the UK (USD 858.1 billion) and Belgium (USD 433.4 billion), also contributed to the overall surge in US debt holdings, pushing foreign ownership beyond 30% of total US debt.
Analysts note that China’s People’s Bank of China has traditionally made minor monthly adjustments to optimize returns or support the yuan. The current USD 343.6 billion decline, however, aligns with Beijing’s broader strategy to diversify into gold and yuan-denominated assets amid US trade pressures. Similarly, India’s Reserve Bank appears to be reducing its exposure strategically rather than for routine maturities.
The developments reflect a broader geopolitical shift, highlighting an increasingly multipolar global economy where US debt markets are becoming a site of political and economic maneuvering. While overall foreign holdings signal continued confidence in US securities, the retreat of China and India raises questions about the long-term appeal of Treasuries amid escalating trade hostilities.
The unfolding situation underscores a complex balance for the US: relying on foreign creditors to fund fiscal ambitions while navigating tensions with major trading partners, a dynamic that could reshape global financial power in the coming years.
