The U.S. national debt of $35 trillion is enough to bankrupt many countries, yet the United States remains unfazed.

They consider themselves a financial powerhouse and thus dare to act recklessly, unaware that they are already on the brink of disaster.

However, one interesting point is that China's holdings of U.S. debt have been climbing, even surpassing the combined amount of South Korea and France.

So, how much U.S. debt does China currently hold?

And why do we hold so much U.S. debt?

In August 2024, the latest data released by the U.S. Department of the Treasury showed that the total U.S. national debt has broken through the $35 trillion mark.

This figure not only set a historical record but also shocked the global financial market.

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It's important to note that in 2017, the U.S. national debt was only $20 trillion.

In just seven years, the U.S. debt has increased by 75%, a growth rate that could be described as "barbaric growth."

So, what has caused the U.S. national debt to grow so wildly?

First, an aging population is an important factor.

The U.S. population is not large to begin with, and with the continuous decline in birth rates, their aging problem is becoming more severe.

As a result, the U.S. government's spending on social security and medical insurance is soaring.

Second, the continuous rise in medical costs is also an important reason.

The U.S. medical system has always been known for its high costs, and the government has to increase spending in this area to ensure the medical rights of the people.

In addition, insufficient tax revenue is also a key factor leading to the growth of the national debt.

The current "reshoring" of manufacturing in the United States is making a lot of noise, and in order to stimulate the economy, Trump began large-scale tax cuts during his tenure.

Although this achieved the goal, it has led to a continuous reduction in U.S. government tax revenue, and they have to issue more national debt to make up for the fiscal deficit.

This situation is like a family whose income is not increasing but decreasing, but the expenditure is increasing.

In the end, they can only rely on borrowing to get by, and the debt naturally rolls more and more.

However, it is puzzling that in the face of such a serious debt problem, the U.S. government seems not to be in a hurry.

Although the Democratic and Republican parties argue over many issues, they are surprisingly unanimous on increasing spending and expanding deficits.

This reminds people of an old fable: a group of people found a goose in the forest that laid golden eggs.

Instead of carefully raising the goose, they are scrambling to get more golden eggs.

In the end, the goose was killed, and the golden eggs were gone.

Will the U.S. national debt be the goose that lays golden eggs?

And will global investors become the last person to take over?

As the saying goes, "it takes two to tango."

The wild growth of U.S. national debt cannot be separated from the "support" of global investors.

In this global capital "big show," South Korea and France are undoubtedly two interesting roles.

Let's talk about South Korea first.

As the United States' closest "little brother," South Korea's holdings of U.S. debt had reached $114 billion in March last year.

Interestingly, South Korea's attitude towards U.S. debt is like a cautious investor.

At the beginning of last year, South Korea's holdings of U.S. debt were relatively stable, with no significant increase or decrease.

This "neither hot nor cold" attitude is somewhat like the "gentleman's friendship is as light as water."

Let's take a look at France.

As an economic powerhouse in Europe, France's attitude towards U.S. debt is "big."

The latest data shows that France holds $307.2 billion in U.S. debt, breaking through the $300 billion mark.

This figure is almost equivalent to France's annual military expenditure.

What's more surprising is that in June this year alone, France increased its holdings of U.S. debt by $24.2 billion, becoming the largest increaser of U.S. debt in that month.

France's "big" operation is like a "French Revolution" in the financial market, but this time the target of the revolution is not the feudal nobility, but the old order of the global financial market.

So, why is France so fond of U.S. debt?

Some analysts believe that France's large-scale increase in U.S. debt may be to hedge against the risks of the eurozone.

After all, against the backdrop of increasing global economic uncertainty, U.S. Treasury bonds are still regarded as the safest haven.

Another view is that France's increase in U.S. debt may be to reduce the euro exchange rate and enhance the competitiveness of its own exports.

But no matter what the reason, it can be seen that France's "ambition" is expanding.

It can be seen that South Korea's prudence and France's aggressiveness, two completely different investment strategies, have staged a wonderful "East-West confrontation" in the U.S. debt market.

However, in this U.S. debt "struggle," there is a bigger player that cannot be ignored, that is, China.

As the second-largest overseas holder of U.S. Treasury bonds, China plays a pivotal role in this game.

So the question is: How much U.S. debt does China hold?

And what is China's attitude towards U.S. debt?

According to the latest data, China holds $780.2 billion in U.S. debt, firmly holding the throne of the second-largest overseas holder of U.S. debt, a figure that is almost equivalent to the annual GDP of Switzerland.

Interestingly, in June this year, China also increased its holdings of U.S. debt by $11.9 billion, which is not only the largest single-month increase this year, but also seems to have played a beautiful "Tai Chi" in the international financial market.

So, why is China increasing its holdings of U.S. debt at this time?

Some analysts believe that China's move may be to seize the "inflection point" of the U.S. debt market.

In the same month that China increased its holdings, U.S. debt prices rose across the board, and the yield on 10-year U.S. debt once fell below the 4% mark.

However, China's strategy is far more than this.

Data shows that China's foreign exchange reserves are showing a trend of diversification, which is like a smart investor, not putting all eggs in one basket.

In addition, it is interesting that while increasing its holdings of U.S. debt, China has suspended the increase in gold reserves.

This seemingly contradictory operation actually hides a mystery.

It is important to know that since November 2022, China has increased its gold reserves for 18 consecutive months, with a total increase of about 316 tons, which is equivalent to the weight of 40 fully loaded trucks!

But when the international gold price hit a historical high, China pressed the "pause button."

This operation can't help but remind people of a famous Chinese idiom "to catch someone, let them go."

On the financial market stage, China always seems to maintain a subtle balance, neither completely relying on U.S. debt nor over-hoarding gold.

On the one hand, by moderately increasing U.S. debt to maintain the stability of U.S. dollar assets; on the other hand, by diversifying investments to reduce dependence on a single asset, this "advance and retreat with evidence" approach is somewhat like the charm of "Tai Chi."

What's more noteworthy is that although China is still the second-largest overseas holder of U.S. debt, its holdings have been far lower than their peak.

Data shows that China's holdings of U.S. debt have decreased by about $540 billion compared to the peak of $1.32 trillion in 2013.

Some analysts believe that China is cautiously balancing its foreign exchange reserve structure, both to maintain sufficient U.S. dollar assets to cope with international trade needs, and to reduce excessive dependence on the U.S. dollar.

But in any case, it is believed that the country's approach has its own considerations.

So let's talk about the first "big U.S. debt holder."

As the saying goes, "it takes two to tango."

The big play of the U.S. Treasury bond market can't be staged by a few protagonists alone, and it also depends on the performance of the supporting actors.

Let's take a look at this global "scramble" for U.S. debt.

In June this year, the scale of U.S. debt held by foreign investors set a historical record, reaching an astonishing $8.21 trillion.

This crazy "scramble" behavior can't help but remind people of China's "Double 11" shopping festival.

However, the protagonist this time is not ordinary consumers, but central banks and large financial institutions.

Interestingly, many developed countries seem to be playing a game of "musical chairs."

They scramble to "get on" U.S. debt before the Fed may cut interest rates, as if they are afraid of missing the last bus.

This behavior is like placing the last big bet in the casino, hoping to turn the tide in one fell swoop.

Why are these countries so keen on U.S. debt?

Some analysts believe that this may be to replenish foreign exchange reserves.

In the context of increasing global economic uncertainty, U.S. debt is still regarded as the safest "haven."

However, in this U.S. debt "scramble" drama, the performance of an important role is particularly eye-catching, that is, Japan.

As the largest overseas holder of U.S. debt, every move of Japan affects the nerves of the global financial market.

However, unexpectedly, Japan has reduced its holdings of U.S. debt for three consecutive months.

In June alone, Japan reduced its holdings of U.S. debt by $10.6 billion.

If you extend the time to three months, Japan has reduced its holdings of U.S. debt by $70.1 billion.

Analysts point out that Japan's behavior of reducing its holdings of U.S. debt is closely related to its intervention in the yen exchange market.

Recently, the yen has depreciated sharply, once hitting a new low in 32 years.

In order to boost the yen, Japan has to sell U.S. dollar assets, including U.S. Treasury bonds.

On the one hand, it is necessary to maintain the yen exchange rate, and on the other hand, it is necessary to maintain sufficient foreign exchange reserves.

Japan's dilemma is reminiscent of the famous "dilemma" of "advance and retreat."

What's more interesting is that while Japan is significantly reducing its holdings of U.S. debt, it suddenly announced an interest rate hike of 25 basis points.

This move is like throwing a bomb on the calm lake surface, causing violent turmoil in the financial market.

Some experts point out that Japan's operation is like playing a big chess game.

By reducing its holdings of U.S. debt and raising interest rates, Japan is trying to find a balance between dealing with the depreciation of the yen and the risk of stagflation.

This approach is somewhat like "fighting fire with fire."

However, whether Japan's strategy can be effective remains to be tested by time.

After all, on the financial market stage, every decision may produce a butterfly effect and trigger a chain reaction.Looking at the entire text, we can see that in this financial war without smoke, there are no permanent winners, nor are there absolute losers.

Each country is seeking a balance between risk and return based on its own situation, and this is where the charm of the international financial market lies.

Now, this financial drama is far from over, with more excitement still to come, let's wait and see together.