Why is China dumping U.S. debt?

China is reducing its U.S. debt holdings due to a strategic shift towards de-dollarization, seeking reserve diversification, and as a response to geopolitical tensions, aiming to lower reliance on the dollar, support its yuan currency, and potentially gain leverage, though a massive sell-off would hurt China too. This gradual selling helps China build alternative systems, move away from U.S. financial influence, and invest in other assets like gold, driven by long-term economic and political goals, not just trade war tactics, reports Yahoo Finance and South China Morning Post.

What percent of U.S. debt is owned by China?

China owns roughly 2-3% of total U.S. debt, holding around $750-$860 billion in Treasury securities as of late 2024/early 2025, making it the second-largest foreign holder after Japan, which holds significantly more, according to data from the Treasury Department and financial sources, Investopedia, Visual Capitalist, and Congress.gov. While China's holdings have decreased, they represent a small fraction of the entire U.S. debt, most of which is held domestically. 

Who actually owns the U.S. debt?

U.S. debt is owned by a mix of domestic and foreign entities, primarily the Federal Reserve, government trust funds (like Social Security), mutual funds, investors, and foreign governments (like Japan and China), split between "debt held by the public" and "intragovernmental holdings". Key holders include the Federal Reserve (around 13%), government accounts (around 28%), individuals, corporations, and foreign investors.
 

Is China's debt worse than the US?

While the U.S. has higher absolute government debt, many economists argue China's debt is proportionally worse and more systemic due to its rapid growth, hidden local government liabilities, and China's status as a less developed economy with less financial flexibility than the U.S., creating significant risks despite different underlying economic structures. China's total debt (corporate, household, government) as a percentage of GDP often surpasses the U.S., driven by massive infrastructure spending and real estate, with significant hidden local government debt (LGFVs) adding to the concern. 

What country owes America the most money?

The U.S. owes the most money to Japan, which holds the largest amount of U.S. Treasury securities among foreign countries, followed by the United Kingdom and China as the next biggest foreign holders of American debt, according to data from 2024 and 2025. 

What If China Dumped All Its U.S. Debt Tomorrow?

Can the US get out of debt?

Yes, the U.S. can get out of debt, but it requires significant, often controversial, fiscal changes like substantial spending cuts (Social Security, Medicare), tax increases, or boosting economic growth dramatically; most economists agree a combination of spending reductions and revenue increases is needed to make the debt sustainable, as growing out of it alone is unlikely given current spending demands.
 

Who does the US owe 36 trillion to?

The U.S. owes its $36 trillion national debt to a mix of domestic investors (like banks, mutual funds, and individuals), U.S. government accounts (like Social Security), the Federal Reserve, and foreign investors, with Japan, the UK, and China being the largest foreign holders, primarily through purchasing U.S. Treasury bonds. The largest portion is held domestically, but foreign entities hold trillions, making countries like Japan and China significant lenders.
 

What would happen if China sold U.S. debt?

Since the U.S. dollar has a variable exchange rate, however, any sale by any nation holding huge U.S. debt or dollar reserves will trigger the adjustment of the trade balance at the international level. The offloaded U.S. reserves by China will either end up with another nation or will return to the U.S.

Why doesn't China call in U.S. debt?

Even if China wished to “call in” its loans, the use of credit as a coercive measure is complicated and often heavily constrained. A creditor can only dictate terms for the debtor country if that debtor has no other options, but U.S. debt is a widely held and extremely desirable asset in the global economy.

Why is the US so heavily in debt?

The U.S. is in so much debt because it consistently spends more than it collects in revenue, creating annual budget deficits that add to the total national debt, driven by factors like tax cuts, increased spending on defense and social programs (Social Security, Medicare), emergency responses (wars, financial crises, COVID-19), and the rising costs of servicing the debt itself, leading to a structural imbalance where spending outpaces revenue, particularly with an aging population and growing healthcare costs. 

How many Americans are 100% debt free?

Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve.

What would happen if the US paid off all its debt?

If the U.S. paid off all its debt, it would trigger an economic crisis by eliminating safe investment options (Treasury bonds), causing a massive cash glut, crashing interest rates, disrupting monetary policy (Federal Reserve operations), forcing cuts in government services/spending, and potentially leading to a depression as the economy would lose its primary safe asset, disrupting the entire global financial system that relies on U.S. debt. The process itself, whether through extreme taxes or printing money, would likely cause hyperinflation or deep recession, while the end result removes a critical benchmark for the global economy.
 

Who owns the 35 trillion in U.S. debt?

Who Owns All that Debt? On October 21, 2025, the nation's gross debt eclipsed $38 trillion. Of that amount, approximately 80 percent, was debt held by the public — representing cash borrowed from domestic and foreign investors.

Who owns over 70% of the U.S. debt?

Of the $34.4 trillion in gross debt in 2023, $27.3 trillion (79%) was public debt borrowed from domestic and foreign investors, while $7.0 trillion (21%) was intragovernmental debt, reflecting internal government transactions.

Why do we owe China so much money?

The U.S. owes China money because China, a major exporter, accumulates vast amounts of U.S. dollars from selling goods to America; instead of holding excess cash or converting it all to Yuan, China invests these dollars into safe, liquid assets, primarily U.S. Treasury bonds, effectively lending money to the U.S. government, which benefits both nations by funding U.S. spending and providing China a stable investment for its reserves. 

Can the US print money to pay off debt?

Shortly after the founding of the Federal Reserve, the U.S. Treasury adopted policies that induced the Fed to monetize government debt. Monetizing debt means the government borrows money to buy goods and then repays its debt by printing more money.

Does America still owe China?

Yes, the U.S. still owes China money, as China holds a significant amount of U.S. Treasury bonds, making it one of the largest foreign holders after Japan, though China has been reducing its holdings, moving from a top holder to around the second or third spot as the U.S. relies more on domestic investors and other nations, but it's a small portion of the total U.S. debt, which is owned mostly by Americans. 

What is the safest place for money if the US defaults on debt?

If the US defaults. there is no safe place to put your US Dollars. The alternatives are commodities (gold,silver,collectibles) or possibly foreign currencies (euro,pound,etc). But really, if the US defaults the best assets you'll have would be canned goods and ammunition.

What happens if a country refuses to pay its debt?

If a country refuses to pay its debt (sovereign default), it faces severe consequences: financial isolation with high borrowing costs, economic recession, market chaos, capital flight, higher unemployment, and cuts to public services, leading to poverty, social unrest, and lasting damage to its economy and reputation, often prompting renegotiation, but sometimes resulting in seizing assets or diplomatic/military pressure from creditors. 

Could China survive without the US?

Yes, China could survive without the U.S. because it has diversified its trading partners significantly, particularly within Asia, the EU, and the Global South, and possesses a massive internal market, but losing the U.S. market would still cause significant economic disruption, slow growth, and impact its technological development in key areas like semiconductors, forcing reliance on domestic innovation or alternative partners like Europe. 

Who is the biggest buyer of US debt?

Japan is the biggest foreign holder of Treasurys, with a roughly 13% share, according to the most recent data from the U.S. Treasury Department, and the concern is that the country's investors might one day pull the rug by keeping more of their savings at home.

How does the US benefit from Chinese loans?

Liquefied natural gas developments, data centres and new airport terminals are among the major US infrastructure projects bankrolled by Chinese state-owned entities. A new study has found that China's overseas lending portfolio is far larger than previously understood.

Can the USA get out of debt?

There are a number of methods to reduce the U.S. national debt that go beyond raising taxes and cutting discretionary spending. One of the most controversial is to open the nation's borders to more immigration, kick-starting entrepreneurship and consumption.

Who got the US debt to 0?

The U.S. has had debt since its inception. Our records show that debts incurred during the American Revolutionary War amounted to $75,463,476.52 by January 1, 1791. Over the following 45 years, the debt grew. Notably, the public debt actually shrank to zero by January 1835, under President Andrew Jackson.

What country is most in debt?

The United States has the largest total national debt by far (over $38 trillion in 2025), followed by China and Japan, though Japan has a significantly higher debt relative to its GDP, around 230%. However, countries like Sudan, Singapore, Venezuela, and Lebanon face severe debt crises with debt-to-GDP ratios exceeding 160-220%.