China Holds $618 Billion Of U.S. Debt, Only 2 Countries Hold More
Japan holds more American debt than any other nation, and when the yen started cracking this summer, that leverage pulled the U.S. Treasury and the Federal Reserve into a fight over who would foot the bill for the rescue.
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China ranks as the third-largest foreign holder of U.S. government debt, and that ranking draws most of the attention. Per U.S. Treasury TIC data (Table 5) as of July 2026, Mainland China holds $618.0 billion. Only Japan, at $1,103.9 billion, and the United Kingdom, at $998.3 billion, hold more. Belgium follows China at $483 billion, and the Treasury data puts total foreign holdings at $9,248.1 billion.
The figure varies month to month by source. It appeared as $633 billion in June and around $693 billion in August. China’s holdings peaked at roughly $1.32 trillion in 2013.
Japan’s Top Spot Pulled Washington Into Currency Markets
Japan’s position as the largest holder explains, in part, why the U.S. Treasury intervened in currency markets this summer. The joint intervention ran August 1 to 4, 2026, was the first joint U.S.-Japan currency intervention since 2011, and had the New York Fed selling euros to buy yen.
Reuters reported on August 3, 2026 that Treasury Secretary Scott Bessent urged a bigger Fed backstop. The Wall Street Journal examined why he was leaning on the Fed to prop up Japan’s currency, while Bloomberg and The Japan Times reported on August 4, 2026 that he sought Fed help in an unusual call. CNBC’s analysis described Bessent pushing the Fed, led by Chair Kevin Warsh, to expand the backstop.
How FIMA Was Supposed to Work
The Fed’s FIMA Repo Facility lets foreign central banks borrow dollars by putting up Treasury holdings as collateral, avoiding a flood of supply that could push U.S. rates higher. The arrangement was meant to let Japan borrow dollars against its Treasuries.
finance.biggo reported on August 3, 2026 that Bessent publicly urged the Fed to expand it, describing the move as a rare overstep. bloomingbit reported on August 5, 2026 that the push put focus on a key tool for Japan’s yen defense.
Evidence Suggests Japan May Have Sold Anyway
The Japan Times reported on September 7, 2026 that Japan likely sold Treasurys to fund its record yen intervention. If accurate, the mechanism did not fully achieve what it was designed to do.
Reuters reported on August 4, 2026 that expanding the Fed’s foreign lending facility may not be risk-free. schiffgold argued on August 12, 2026 that the facility cannot save Japan or the U.S., and the Financial Times ran Broken FIMA on August 16, 2026. Within weeks, one policy tool was pushed, criticized and possibly skirted.
Why Treasury Sales Matter for Your Borrowing Costs
When a large holder sells Treasuries, added supply can push yields up and raise U.S. borrowing costs. The 30-year Treasury yield was around 5.23% at the time of the intervention and 5.49% on September 25, 2026. Long-end yields remain elevated.
Bessent’s Currency Past and Loose Ends
Per Fortune, Bessent worked at Soros Fund Management in the 1990s, was involved in the 1992 British pound short that earned roughly $1 billion, and has made more than 50 visits to Japan since 1989. Fortune also reported that his notepad, photographed at Camp David, read “Buy Japanese Yen (JPY) $5-10 bil.”
Japan’s bond yields hit 30-year highs on September 1, 2026 as Bessent stepped up pressure on Japan. Fresh headlines show Japan’s currency officials again warning against yen weakness. Our August 3, 2026 coverage of Japan’s historic yen intervention offers related background.
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AJ spent 10 years writing about financial markets at The Motley Fool. His coverage centers on technology stocks and the broader macroeconomic trends, from interest rates to geopolitics, that shape where markets are headed next. AJ is drawn to the stories where big-picture economics and individual companies collide.
