“China owns our debt.”
I still hear this now and again, but it’s not true.
Ok. Well, it is true that China owns debt, but many say it as if China is the primary holder.
They are not.
The largest holders of U.S. debt are right here in the US domestically, and around 10 trillion of that debt is owned by people like you through individual investment, mutual funds, and pensions.
China doesn’t even hold a trillion (LOL) and is not even the biggest holder of our debt among foreign governments.1
According to Congress, the largest foreign holder of US debt is Japan at nearly 13%. Next are our friends across the pond, the UK. In third place, and at a decreasing level, is Mainland China running in at just over 4%.
Recently, US debt eclipsed the $40 trillion mark, making that first Visual Capitalist chart outdated.2
Should we be worried? Possibly.
You find plenty of people railing against it in the media. And you hear some politicians pontificate on it, though neither side seems to make any significant efforts toward resolving it.
Posturing, anyone?
With all the pessimism out there around this, I thought it was worth adding some recent optimism over on X from one portfolio manager in the wealth management business:
My most contrarian take right now is I’m not worried about a US government debt crisis.
We have the biggest economy.
We have the reserve currency.
We have the most rich people.
There is no substitute for Treasuries.
We’ll just keep spending and people will complain but no crisis will occur.
Maybe I’ll be wrong, but people have been predicting this for over a century and they’ve always been wrong.3
I’m not going to say no crisis will occur. I don’t make these kinds of predictions.
But I think it’s worth remembering the positives with so many predicting a blowup.
There are clear problems in America. There are also many blessings like the ones he mentioned.
It’s also worth pointing out that one benefit of rising yields in US government debt is that bonds are paying more in investment portfolios.
In the past few decades—though that guarantees nothing and further spikes in yield can cause bond prices to fall—increases in yield have historically been followed by increases in future bond returns. For example, since 1999, starting yield of 4.6% on a 10-year Treasuries have produced annual returns higher than 4.6%.
This is not meant as investment advice to go buy bonds. It is meant to remind you about a myth around China and bonds, and to remind you that you probably own a few Treasuries too in your portfolio.
And they are probably making you more money on interest than they used to.
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Sources:
1. “Foreign Holdings of Federal Debt”, Data as of 12/31/25. Accessed online.
2. “Who Owns America’s $39T Debt?”, Boyan Girginov, April 13, 2026. Accessed online.
3. Ben Carlson, August 19, 2026 (lightly edited for grammar). https://x.com/awealthofcs/status/2090190352745447726