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Table of Contents

5 Countries That Own the Most U.S. Debt

Foreign ownership of U.S. debt through Treasury holdings

The U.S. government incurs debt when it issues Treasury securities to fund the deficit between the amount of money that it receives in taxes and other revenues versus the amount of money that it spends on defense, welfare programs, the interest it pays on its current debt, and more. As of March 2022, the government's total debt was over $30.2 trillion.

Key Takeaways

  • The Bureau of Public Debt classifies national debt in two ways: intragovernmental debt and debt held by the public. 
  • Over three-quarters of the total national debt is public debt, which includes Treasury holdings by foreign countries.
  • Japan is the largest foreign holder of public U.S. government debt, owning $1,303 billion in debt as of January 2022.
  • China ranks second in total U.S. debt owned by foreign countries, with the U.K., Luxembourg, and Ireland rounding out the top five.
  • The total national debt was over $30 trillion at the end of March 2022.

Types of Debt

U.S. debt is categorized as intragovernmental debt and public debt. Intragovernmental debt is debt held within the U.S. by federal agencies and entities. It makes up about a fifth of total outstanding U.S. debt. This debt includes money owed to Social Security, military retirement funds, Medicare, and other retirement funds.

The remainder is public debt. Foreign governments hold a large portion of the public debt, while the rest is owned by U.S. banks and individual investors, the Federal Reserve, state and local governments, mutual funds, pensions funds, insurance companies, and holders of savings bonds.

As of March 2022, over $23 trillion of the national debt was public debt.

The Debt Ceiling


Congress sets a ceiling on the debt that can be raised periodically. On December 14, 2021, the debt ceiling was raised by $2.5 trillion to $31.4 trillion. This is the largest dollar amount increase of the national debt.

Which Countries Hold the Most U.S. Debt?

1. Japan

Japan held $1,303 billion in Treasury securities as of January 2022, beating out China as the largest foreign holder of U.S. debt. The low and negative yield market in Japan makes holding U.S. debt attractive. Japan holds 17% of foreign-owned U.S. debt.

2. China

China gets a lot of attention for holding a big chunk of the U.S. government's debt. Given its rapidly expanding economy, perhaps this shouldn't come as a surprise. China takes the second spot behind Japan among foreign holders of U.S. debt with $1,060 billion in Treasury holdings in January 2022.

While Chinese-owned debt is frequently drummed up as a political talking point, there's nothing particularly sinister about an export-oriented economy investing in Treasury securities. In fact, Treasuries are a logical investment for a country with high foreign currency reserves. China currently holds almost 14% of U.S. foreign debt.

3. United Kingdom

British investors increased their holdings of U.S. debt to $647 billion in December 2021, an eight-year high. This declined to $608 billion the following month. The U.K.'s investment in U.S. debt may be linked to growing economic uncertainty in the U.K. It's still recovering from the effects of the coronavirus pandemic as well as the loss of many trading relationships due to Brexit. British entities hold 8% of the total foreign debt.

By far, the largest owner of U.S. debt is actually the U.S. government, which holds Treasury securities in various government accounts and pension funds.

4. Luxembourg

Luxembourg is the fourth-largest holder of U.S. debt among foreign countries while having one of the highest GDP per capita—$116,014 as of 2020. This ranking may be due to Luxembourg's status as a tax haven, where wealthy investors park their funds in local holding companies. Much of this wealth is then invested in various securities, including Treasuries.

As of January 2022, Luxembourg held $310.8 billion in U.S. Treasuries, equal to 4% of total foreign holdings.

5. Ireland

It might seem odd that Ireland is the fifth-largest holder of U.S. debt, particularly when comparing its smaller economy to other European nations, such as Germany. However, a big reason for Ireland's rank is the fact that many U.S. multinational companies, such as Alphabet/Google and European branches of technology and pharmaceutical firms, set up shop there for more favorable taxes on foreign returns. These companies then invest their excess cash in various low-risk investments, including Treasury debt.

However, there has been a drop in Ireland's U.S. debt holdings. This signals a possible change in multinational attitudes as rules regarding the taxation of foreign earnings change. As of January 2022, Ireland held $308.3 billion in U.S. debt, which is 4% of total foreign debt.

Who Owns the U.S. Debt Besides Foreign Governments?

Other holders of U.S. national debt include U.S. banks and investors, state and local governments, mutual funds, pension funds, insurance companies, and investors in savings bonds. Various agencies and entities within the U.S. government also own debt (known as intragovernmental debt).

What Is the Current National Debt?

As of March 2022, the total U.S. national debt was over $30.2 trillion, after crossing the $30 trillion mark for the first time in February. At the end of 2019, prior to the COVID-19 pandemic, the national debt was $22.7 trillion. One year later, it had risen to $27.7 trillion. Since then, it has increased more than $2 trillion.

Why Is the National Debt So High?

It's high because the U.S. continues to spend more than it receives in revenue. Therefore, it must issue more debt to cover the difference. The national debt is an accumulation of federal budget deficits. Every spending program and tax cut adds to the debt, unless paid for by new appropriations.

Why Is the U.S. in Debt to China?

The U.S. doesn't restrict who may buy its securities. China invests in U.S. debt because of the positive effect these low-risk, stable investments can have on its economy. By investing in dollar-denominated securities, the value of the dollar increases relative to the value of China's currency, the yuan. This, in turn, makes Chinese goods cheaper and more attractive than U.S. goods to buyers. That increases sales and strengthens the economy.

Who Owns Most of the National Debt?

The largest single holder of the national debt is actually the U.S. government, through its various government departments, independent agencies, and trust funds. The Federal Reserve holds $5.3 trillion of U.S. debt, the Social Security Administration has $2.9 trillion, and the Department of Defense has $1.3 trillion. Smaller amounts are held by Medicare, the Civil Service Retirement and Disability Fund, and various state and local governments.

Article Sources

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  1. U.S. Department of the Treasury. "Debt to the Penny."

  2. U.S. Department of Treasury. "Major Foreign Holders of Treasury Securities."

  3. Congress.gov. "S.J.Res.33 - A Joint Resolution Relating to Increasing the Debt Limit."

  4. The World Bank. "GDP per capita (current US$) – Luxembourg."

  5. The World Bank. "GDP (Current US$) – European Union."

  6. VoaNews ."US National Debt Tops $30 Trillion for First Time in History."

  7. DataLabs.gov. "Breakdown of the Federal Government's Debt."

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