The US national debt currently stands at a record $22.4 trillion. According to the Congressional Budget Office, the US will continue to run annual budget deficits, and incur debt at rates not seen since World War II. So, who owns all those Treasury bills, notes, and bonds? As the US-China trade war heats up, the mainstream media continues to remind us that China is the largest foreign holder of the US Treasury securities. Let’s check out who are the other nine.

A large portion of the US Treasury securities is owned by Americans, not foreigners. The US government and Federal Reserve together hold more than $8.1 trillion of the US debt. Another $7.6 trillion is held by American investors via mutual funds, pension funds, banks, insurance companies, and other investors.

Capri23auto / Pixabay

As of May 2019, foreign holders have $6.53 trillion worth of US Treasury securities. It means foreigners hold less than a third of the total US national debt. Many foreign holders such as China, Japan, and the UK have been accumulating US debt for decades.

These are the top 10 largest foreign holders of the US Treasury securities:

10- Belgium, $190.5 billion

According to the Treasury Department data, Belgium held $190.5 billion worth of US debt at the end of May 2019. It sits right above Saudi Arabia, which has $179 billion of US debt. The European nation has been steadily increasing its holding. Back in May 2018, Belgium’s holding was $150.5 billion.

9- Hong Kong, $204 billion

The semi-autonomous, special administrative region (SAR) of China holds $204 billion of US debt, up from $191.9 billion in May 2018. Many speculate that the Chinese government entities and investors might be purchasing US Treasury securities through Hong Kong.

8- Cayman Islands, $216.1 billion

The Cayman Islands are a group of three tiny islands in the Caribbean Sea with a population of just 60,000. And they happen to be one of the largest foreign holders of the US Treasury securities. That’s because the Cayman Islands are a tax haven, and have more than 10,000 investment firms domiciled there. Many of those funds invest in the US debt.

7- Luxembourg, $229.6 billion

Luxembourg features among the largest foreign holders for the same reason as the Cayman Islands. The landlocked nation is a European tax haven. Luxembourg is a front for hedge funds and sovereign wealth funds whose owners don’t want to reveal their investment positions.

6- Switzerland, $231.4 billion

Switzerland is one of the world’s wealthiest and most innovative nations. The country’s holding of the US debt has declined from $243.4 billion in May 2018 to $231.4 billion in May 2019. Though pressure from the US and the European Union has forced Switzerland to weaken its privacy laws, it remains a popular tax haven.

5- Ireland, $270.7 billion

Ireland’s holding of the US Treasury securities has come down from $301 billion in May 2018 to $270.7 billion in May 2019. Ireland is home to the overseas headquarters of US tech giants like Facebook, Apple, and Google-owner Alphabet. These companies don’t like to bring their overseas profits back to the US because they will have to pay a hefty repatriation tax. Instead, they use their overseas profits to buy US Treasury securities.

4- Brazil, $305.7 billion

Brazil’s own federal debts have reached alarming levels, but the South American nation continues to buy US debt. Its holding of the US Treasury securities ticked up slightly from $299.2 billion in May 2018 to $305.7 billion in May 2019.

3- United Kingdom, $323.1 billion

The UK economy is in turmoil as Brexit remains a major concern for politicians and investors. In the meantime, the United Kingdom has significantly increased its holding of the US debt. The UK held $265 billion worth of US Treasury securities in May 2018, which has swelled to $323.1 billion in May 2019.

2- Japan, $1,101 billion

Japan and China are the only two countries that own more than $1 trillion worth of Treasury bonds and notes. Japan has been buying the US government securities for decades to keep its currency undervalued against the US dollar. As a result, Japanese products remain affordable in the US market.

1- China, $1,110.2 billion

China is the largest foreign holder of the US debt. For decades, it had been accumulating Treasury securities to keep yuan from strengthening against the US dollar. But the country has been reducing its holding in recent years. China’s holding has declined from $1,183.1 billion in May 2018 to $1,110.2 billion in May 2019.

Many experts fear that Beijing could dump the US securities as the US-China trade war continues to escalate. But such an act could destabilize the global financial system, including that of China. Economists believe that China’s holding is much higher than what’s officially represented. That’s because the Chinese government and investors likely purchase US debts through entities in Hong Kong, Cayman Islands, and Luxembourg.