Why is Canada’s holding of U.S. government debt trending?
Canada's holdings of U.S. treasury securities have surged, potentially surpassing China as a top-three creditor by 2028 [1]. This trend is fueling theories that China is using Canadian accounts to hide its continued investment in U.S. debt [1, 2].
What happened
- 2021
Canada held approximately US$106-billion in U.S. treasury securities [1].
- Late August 2025
A report noted Canada was on pace to overtake China as a U.S. treasury holder [1].
- End of 2025
China's international investments reached US$1.99-trillion [1].
What you need to know
Canadian holdings of U.S. treasuries have risen over 300% since 2021 to roughly US$426-billion [1].
Some analysts believe China is moving assets to Canadian-domiciled accounts to mask its role in financing U.S. deficits [2].
Higher U.S. interest rates compared to Chinese bonds have increased demand for U.S. treasuries [1].
Official data attributes holdings to where assets are kept, not necessarily who owns them [1].
It is not confirmed if China is the primary driver of the increase, as official Chinese government allocations are state secrets [1]. There is no direct evidence linking Canadian banks to Chinese activity [2].
Background
U.S. treasury securities are government bonds that act as a safe haven for investors. Because these assets are often held in custodian banks, the reported country of ownership is based on the location of the account [1].
China has officially reduced its U.S. treasury holdings by about 40% since 2021 [1]. However, experts suggest China may use intermediaries in countries like Belgium and Canada to maintain these positions while appearing to pull back [1, 2].
Questions people ask
Why would China hide its U.S. debt holdings?
It allows Beijing to appear as though it is reducing its reliance on the U.S. dollar system while still benefiting from U.S. bond yields [2].
Is the increase only due to China?
Not necessarily; some experts say Canadian investors are simply buying more treasuries because of higher yields [1].
Where this came from
Found through Google Trends and drafted with AI from at least two cited sources. Published automatically after passing our automated checks for sources, wording and safety. It may not have been reviewed by a person yet. Report a correction.