For the Third Consecutive Month, China Reduces U.S. Treasury Holdings by $900 Million in May, While Japan and the United Kingdom Increase Holdings

On July 17 local time, the U.S. Department of the Treasury released its latest monthly update, showing shifts in foreign holdings of U.S. Treasuries as of May 2025. Among the top three holders, Japan and the United Kingdom recorded slight increases, while China continued to reduce its portfolio for a third consecutive month.

According to the May 2025 Treasury International Capital (TIC) report, Japan raised its holdings by $500 million, bringing the total to $1.135 trillion—retaining its position as the largest foreign creditor. The United Kingdom followed with an increase of $1.7 billion, raising its holdings to $809.4 billion and maintaining second place.

China’s holdings declined by $900 million, settling at $756.3 billion. This marked three straight months of reductions since China dropped to third place in March. China's total holdings of U.S. government debt have stayed below $1 trillion since April 2022, with a generally downward trend. Monthly movements in 2025 show a $1.8 billion increase in January and a $23.5 billion rise in February, followed by a $18.9 billion decrease in March and an $8.2 billion drop in April. For three consecutive years, China scaled back its holdings: $173.2 billion in 2022, $50.8 billion in 2023, and $57.3 billion in 2024.

The report also outlined broader foreign activity across U.S. securities and banking flows. In May, total net foreign inflows reached $311.1 billion. Of that amount, private sector investors accounted for a net inflow of $333.2 billion, while official institutions recorded a net outflow of $22.1 billion.

Foreign net purchases of long-term U.S. securities rebounded in May, totaling $318.5 billion after a net sale of $50.6 billion the previous month. Private investors added $287.5 billion, and official entities contributed $31.1 billion in net purchases. After factoring in equity swaps and similar adjustments, foreign investors ended May with a net sale of $259.4 billion in long-term U.S. securities—compared to a $7.8 billion net sale in April.