The two countries continue to gradually “get rid” of US bonds from their treasuries.
The world's second and fifth largest economies continue to sell US bonds from their treasuries, causing a serious headache for the Trump administration.
China is the third-largest holder of US Treasuries outside the US, but its holdings have fallen by more than 10% since the start of 2025. In total, China reduced its holdings of US Treasuries to $682.6 billion – the lowest level since September 2008.
India also reduced its holdings of US Treasuries to a five-year low – to $174 billion, 26% less than the peak reached in 2023, according to US government data cited by Greek media.
“Cold War”, the bond phase
It is no coincidence that US Treasury Secretary Scott Besant talks about a “Cold War” between Beijing and New Delhi on the one hand and Washington on the other.
A trade war as President Trump has imposed tariffs of 10% on China and 50% on India.
“For New Delhi, in fact, the trade agreement with the European Union is the most important it has ever negotiated with foreign countries and reinforces India's belief that trade liberalization is a key lever for achieving the goal of becoming a developed country by 2047,” European diplomats point out. “It also reinforces the idea, reiterated time and time again by Prime Minister Narendra Modi, that India is a bridge between the West and the Global South, at the center of global economic and geopolitical balances.”
India still has room to reduce its government bond holdings, says Seelan Shah of Capital Economics. “The speed with which US-India relations deteriorated last year would have surprised many and prompted policymakers to reduce their vulnerabilities,” he adds.
Doubts about US bonds
“In investment circles, President Trump's tariffs, as well as the imposition of discretionary sanctions, have raised doubts about whether US government bonds remain the best investment option,” market players told Naftemporiki.
“All of this raises questions about the role of US debt as a reserve asset. Much of this shift likely reflects a shift away from dollar assets to mitigate sanctions risks,” according to Win Thin, chief economist at the Bank of Nassau.
“When Donald Trump began imposing tariffs around the world starting in April 2025, US assets plummeted. Either out of revenge or uncertainty, the exodus of global investors fueled the idea of “Sell America,'' and people began to abandon the US amid new, more aggressive international and trade policies,” say experts. “This outlook has been dire, particularly for the US public debt, as about a quarter of the bonds are held by foreign entities.”
High stakes
“If more and more foreign investors continue to dump US bonds, Washington will have to pay higher interest rates, which puts more pressure on the deficit and financial markets,” he points out and warns market participants: “In the long run, this 'prolonged American sell-off' will further weaken the dollar and gradually erode the United States' economic leadership position.”
For now, however, on an annual basis, foreign holdings of U.S. Treasuries rose 7.2 percent to a record $9.35 trillion in November from $9.24 trillion in October, according to Treasury Department data in Washington. The increase in holdings came from Japan, the United Kingdom, Belgium and Canada. Japan remained the largest holder of non-US Treasuries at $1.2 trillion.
