Debt ceiling: Which countries own the most US debt?
Defaulting on foreign debt could be the most destructive outcome of a failure to raise the debt ceiling, plunging the world into another financial crisis while already in the midst of one.
The US is on the brink of its first-ever default this summer, as Congress and the White House continue its standoff on the issue of raising the debt ceiling.
The country owes trillions of dollars to foreign institutions, including governments, central banks, corporations, and other investors. Foreign governments own a big part of the public debt, which includes treasury bonds and other securities.
The gigantic debt of the US
The United States has a national debt of more than $31 trillion, according to the US Treasury. As of January this year, foreign countries own $7.4 trillion in Treasuries, or approximately a fourth of total US debt. Foreign ownership of securities reached a peak in 2014, when it amounted to 34%, the highest percentage in the country’s history.
This number has gone down since. It slid early in the pandemic as countries like China, Saudi Arabia, and Brazil offloaded their shares of US Treasuries to acquire immediate capital. Countries resumed buying debt by the end of 2020, but the levels have not reached previous highs.
Which countries own the most US debt?
For the past 20 years, Japan and China have been the top two foreign countries with US Treasuries.
According to usafacts.org, as of January 2023, Japan owned $1.1 trillion in US Treasuries, making it the largest foreign holder of the national debt. The second-largest holder is China, which owned $859 billion of US debt. Both these countries wish to keep the value of the dollar higher than those of their own currencies, to help keep their exports to the US affordable.
China overtook the UK as the second-largest foreign holder in 2006.
The UK remains the third-largest holder with $668 billion. Belgium is next, holding $331 billion, while Luxembourg rounds out the top five with $318 billion.