Seven of the ten largest foreign holders of U.S. Treasury debt — including Japan, China, Belgium, Canada, and France—reduced their holdings in March 2026, in a coordinated retreat driven by the U.S.-Iran war’s energy-cost shock and the need for central banks to liquidate dollar reserves to defend tumbling Asian and European currencies. Total foreign holdings fell 1.5% to $9.348 trillion.
Japan, the largest holder, cut roughly $47 billion to $1.191 trillion. China, the third-largest, cut nearly 6%—about $41 billion—to $652.3 billion, the lowest since September 2008 and a continuation of Beijing’s drawdown since holdings peaked above $1.3 trillion in 2013. Among major holders, only the UK moved the other way, adding $30 billion to reach $926.9 billion, thereby displacing China as the second-largest foreign holder.
The figures come from the U.S. Treasury’s Treasury International Capital report released May 18. With the dollar rising on the oil shock and other reserve currencies falling, central banks were forced to draw down dollar reserves to fund intervention. The structural fragility on display demonstrates the need to develop a new security and development architecture for the world.