International capital continued to flow into the United States as net inflows increased rather than decreased, indicating that "selling America" trades are merely a macroeconomic narrative rather than an objective reality.
For a long time, due to a mindset formed in an environment of foreign exchange scarcity where "appreciation is good, depreciation is bad," most people have held a persistent belief in the sequence of "currency appreciation - foreign capital inflow - revaluation of domestic assets." Therefore, when the Intercontinental Exchange (ICE) US Dollar Index fell by 9.4% in 2025, recording its largest annual decline in eight years, the notion of "selling America" gained significant traction domestically. However, data from the US Treasury's International Capital (TIC) report, which primarily tracks cross-border portfolio investment, shows that US international capital not only continued to experience net inflows that year, but the amount of net inflow actually increased compared to the previous year. This suggests that "selling America" trades are a macroeconomic story, not an established fact.
The depreciation of the US dollar did little to dampen foreign enthusiasm for US assets. In 2025, net inflows of international capital into the US amounted to $1,351.9 billion, an increase of 11.2% year-on-year, ranking as the second-highest net inflow on record, only behind the $1,623.1 billion seen in 2022.
Analyzing the entities involved, official foreign investors did not engage in large-scale selling of US assets as some markets had anticipated. Instead, they were net buyers to the tune of $3.17 billion, although this represented a sharp 75.8% decrease from the previous year. Net outflows occurred for a cumulative seven months during the year, specifically from March-May and July-October. Private foreign investors, however, remained active buyers of US assets, with net inflows of $1,320.2 billion, an increase of 21.8%. While net outflows were recorded in three months (January, April, October), the full-year net inflow was the second highest historically, only surpassed by 2022's $1,597.1 billion. Therefore, if the dollar's depreciation had any impact, it was primarily on the structure of US international capital flows rather than the total volume.
Since Donald Trump's return to the White House in early 2025, policies including large-scale tariff hikes, deportation of illegal immigrants, government agency reforms, permanent corporate tax cuts, interference with Federal Reserve independence, meddling in other nations' politics, and provoking geopolitical disputes have led to a decline in US global leadership, the undermining of American exceptionalism, and widening cracks in US dollar credibility. Based on the aforementioned data, official foreign investors, with their generally lower risk appetite, were more sensitive to these developments. In contrast, private foreign investors sought opportunities amidst the turmoil, increasing their holdings of US assets against the trend.
Even in the first half of 2025, when the US dollar index fell 10.8% amid pressures on both stocks and the currency, and even stocks, bonds, and the currency simultaneously, marking its worst first-half performance since 1973, net inflows of international capital into the US still increased by 293% year-on-year. Within this, net inflows from private foreign investors surged by 1,114%, while net inflows from official foreign investors decreased by 37.7%.
By instrument, overseas investors were net buyers of long-term US securities amounting to $1,222.0 billion in 2025, a 57.5% increase from the previous year. Foreign holdings of short-term US Treasury bills and other custodial liabilities increased by $199.7 billion, up 1.7%. Conversely, US bank liabilities to foreign residents shifted from a net increase of $243.0 billion the previous year to a net decrease of $69.8 billion.
Within the net purchases of long-term US securities by overseas investors: foreign investors were net buyers of $1,551.7 billion of long-term US securities, representing net inbound long-term portfolio investment, which grew 31.0% and set a new historical record for net inflow. US investors were net buyers of $329.6 billion of long-term foreign securities, representing net outbound long-term portfolio investment, which decreased by 19.4%. This further indicates that despite the dollar's weakness, foreign interest in US assets was undiminished, and there was no concentrated outflow of US capital from foreign securities.
Foreign investors' risk appetite for US assets appears to have increased. Foreign investors primarily hold four major categories of US securities: Treasury securities, government agency bonds, corporate bonds, and equities. In 2025, they were net buyers across all four categories. However, looking at relative changes, net purchases of corporate bonds and equities increased compared to the previous year, while net purchases of Treasury and agency bonds decreased.
By instrument, foreign investors accumulated net purchases of US securities totaling $1,612.4 billion for the full year 2025, an increase of 19.4% year-on-year, setting a new historical record. The breakdown is as follows: net purchases of equities were $720.1 billion, surging 134% and reaching a record high, making equities the largest category of net increase in holdings and the asset with the biggest increase; net purchases of US Treasury securities were $551.0 billion, down 22.6%, representing the second-largest category of net increase, with net purchases of long-term Treasuries at $408.8 billion (down 16.6%) and net purchases of Treasury bills at $142.3 billion (down 36.0%); net purchases of corporate bonds were $367.1 billion, up 20.5%, the third-largest category; net purchases of government agency bonds were $55.8 billion, down 32.8%, the fourth-largest category. Compared to Treasuries and agency bonds, corporate bonds and equities are considered risk assets. These changes indicate a rise in foreign investors' market risk appetite for US assets, corroborating the increased net inflows from private foreign investors.
Analyzing by entity, private foreign investors accumulated net purchases of US securities totaling $1,602.6 billion in 2025, an increase of 18.2%, a record high. Their net purchases included: equities, $658.5 billion, up 133%, a record high and their largest category of net increase; US Treasury securities, $503.4 billion, down 26.2%, comprising net purchases of long-term Treasuries of $442.7 billion (down 14.3%) and net purchases of Treasury bills of $60.7 billion (down 63.3%); corporate bonds, $327.8 billion, up 24.0%; government agency bonds, $112.9 billion, down 11.2%.
Official foreign investors accumulated net purchases of US securities totaling $91.3 billion in 2025, an increase of 77.4%. Their net purchases included: equities, $61.6 billion, up 143%, a record high; US Treasury securities, $47.6 billion, up 57.6%, comprising net sales of long-term Treasuries of $34.0 billion (up 26.9%) and net purchases of Treasury bills of $81.6 billion (up 43.2%); corporate bonds, $39.2 billion, down 2.3%; government agency bonds, net sales of $57.1 billion, up 29.1%, marking the second consecutive year of net sales.
Against the backdrop of US stocks repeatedly hitting new highs, even typically stability-seeking official foreign investors, similar to their private counterparts, could not resist the urge to chase the rally, resulting in net purchases of the risk asset US equities for the third consecutive year. However, in the context of increased US economic policy uncertainty, official foreign investors adopted a strategy towards the risk-free asset US Treasuries characterized by "locking in short-term and selling long-term," leading to an overall increase in net purchases. Private foreign investors, conversely, reduced net purchases of both short and long-term Treasuries while increasing their exposure to the riskier assets of equities and corporate bonds.
It is important to note that the net increase in foreign holdings of US Treasury securities in 2025, amounting to $551.0 billion, accounted for 24.0% of the total new Treasury issuance that year. Although this share was down 8.1 percentage points from the previous year and the lowest since 2022, it was still double the average share of 11.7% seen from 2008 to 2021. In fact, despite the erosion of the US dollar's safe-haven asset status following the Western coordinated financial sanctions against Russia after the outbreak of the Ukraine conflict in 2022, foreign investors remain a significant source of funding for US Treasuries. The average share of new issuance absorbed by foreign investors from 2022 to 2025 was 30.5%, significantly higher than the 2008-2021 average. Furthermore, following the market volatility triggered by Trump's tariff policy announcement in April 2025, foreign investors capitalized on the adjustment in valuations of the US dollar and US assets, significantly increasing their investments in US equities.
Looking at the five major regions defined by TIC, foreign investors from all regions increased their holdings of US securities. Only the Caribbean region saw a smaller increase compared to the previous year, while the other four regions saw larger increases. European foreign investors were net buyers of $878.3 billion of US securities in 2025, an increase of 14.1%, remaining the continent with the largest holdings and increases in dollar assets globally. Asian foreign investors were net buyers of $258.3 billion, up 23.3%. Caribbean foreign investors were net buyers of $319.1 billion, but this was a decrease of 19.0%. Latin American foreign investors were net buyers of $90.9 billion, a significant increase of 165%. African foreign investors were net buyers of $13.2 billion, a massive increase of 267%. This again suggests that "selling America" was an isolated phenomenon, far from a widespread trend.
Notably, Canadian investors were cumulative net buyers of US securities amounting to $89.5 billion in 2025, a sharp reversal from being net sellers of $108.6 billion the previous year. It appears that despite Canadian anger over trade policies hurting their economy and perceived threats to their national sovereignty from the US, politics and business remained separate, and Canadian investors did not deploy financial weapons. Conversely, amid frequent US pressure on Denmark regarding Greenland, Danish investors shifted from being net buyers of $1.9 billion the previous year to net sellers of $3.0 billion of US securities in 2025, potentially indicating that warnings about Danish investors liquidating US assets were being acted upon.
Against the backdrop of severe challenges to the international economic and trade order and increasingly complex and intense major power rivalry, Chinese investors were net sellers of US securities amounting to $210.4 billion in 2025, an increase of 62.2% year-on-year. Furthermore, Chinese investors reduced their holdings across all four major categories of US securities for the second consecutive year, with net sales of US Treasury securities, government agency bonds, equities, and corporate bonds of $112.0 billion, $64.2 billion, $34.1 billion, and $0.14 billion, respectively. Among these, net sales of US Treasuries, corporate bonds, and equities increased by $54.0 billion, $21.4 billion, and $5.6 billion respectively compared to the previous year, while net sales of agency bonds decreased by $0.27 billion.
Non-transaction factors contributed significantly to the increase in global US dollar reserves. Based on TIC data, the global US dollar foreign exchange reserve balance, measured by the value of US securities held by official foreign investors, stood at $6,967.2 billion at the end of 2025, an increase of $420.3 billion from the end of the previous year, representing growth of 6.4%. This increase was attributable to: net purchases of US securities, which contributed $78.5 billion (a 1,361% increase) and accounted for 18.6% of the total reserve increase; and an increase in the value of US security holdings due to non-transaction factors, which contributed $341.8 billion and accounted for 81.4% of the increase. The non-transaction change comprised a positive valuation effect of $458.8 billion and a negative statistical adjustment of $117.0 billion.
A further breakdown of the global dollar reserves held in the four major US security categories shows: Holdings of US Treasury securities were $3,793.8 billion, an increase of $114.2 billion from end-2024, comprising net purchases of $51.8 billion and a non-transaction increase of $62.3 billion. Holdings of US government agency bonds were $489.7 billion, a decrease of $56.9 billion, comprising net sales of $60.1 billion and a non-transaction increase of $3.1 billion. Holdings of US corporate bonds were $236.2 billion, an increase of $22.2 billion, comprising net purchases of $27.7 billion and a non-transaction decrease of $5.5 billion. Holdings of US equities were $2,447.5 billion, an increase of $340.9 billion, comprising net purchases of $59.0 billion and a non-transaction increase of $281.9 billion.
In the fourth quarter of 2025, the comparable global US dollar reserve balance increased by 1.6%, while the US dollar index rebounded by 1.5%, suggesting that the global share of US dollar reserves likely stabilized or increased slightly in that quarter. However, given that the full-year increase in the global dollar reserve balance was 6.4%, which was less than the 9.4% decline in the US dollar index over the same period, the global share of US dollar reserves is still expected to have declined for 2025 overall, marking 11 consecutive quarters below 60%.
Additionally, statistics from the World Gold Council show that as of the end of September 2025, the value of global gold reserves was $4,118.7 billion. This figure exceeded the value of US Treasury holdings within global dollar reserves at that time, which was $3,787.9 billion, and also remained greater than the value of Treasury holdings within global dollar reserves at the end of 2025. This reflects that the importance of gold reserves has surpassed that of US Treasury reserves, marking another significant milestone in the multipolar evolution of the international monetary system.
In conclusion, the structure of the balance of payments, rather than exchange rate fluctuations, determines international capital flows. The increase in net capital inflows into the US in 2025 was largely a mirror image of its expanding current account deficit. In the first three quarters, the US current account deficit was $915.4 billion, up 4.8% year-on-year, while the capital and financial account, including net errors and omissions, saw a net inflow of $918.4 billion, also up 4.8%. Within this, net inbound portfolio investment was $1,343.9 billion, an increase of 34.6$. It was primarily concerns about a trend depreciation of the US dollar, leading investors to collectively hedge their long dollar positions, that accelerated the dollar's decline. Data from the US Commodity Futures Trading Commission shows that since mid-June 2025, the number of non-commercial short positions on the US dollar index has consistently exceeded long positions.
Conversely, although the RMB appreciated by 4.4% against the US dollar in 2025, China's capital and financial account recorded a net outflow of $738.3 billion for the year, which was an increase of 51.9% compared to the previous year. This mirrors the simultaneous current account surplus of $691.6 billion, which grew by 63.1%. Particularly in the first three quarters, while the RMB appreciated by 2.5%, portfolio investment into China shifted from a net inflow of $94.6 billion in the same period the previous year to a net outflow of $45.0 billion. Within this, inbound equity investment saw a net inflow of $13.1 billion, a 154% increase year-on-year, while inbound bond investment shifted from a net inflow of $89.4 billion the previous year to a net outflow of $58.1 billion. In this context, one could at most say that RMB appreciation enhanced the attractiveness of RMB-denominated equities to foreign investors. But are RMB bonds not also Chinese assets? Data from Bond Connect shows that in 2025, foreign investors net reduced their holdings of onshore RMB bonds by 1,301.5 billion yuan, and had been net sellers for nine consecutive months since June 2025.
A more logical interpretation is that the revaluation of Chinese assets does not necessarily require RMB appreciation as a precondition; instead, RMB appreciation might be a consequence of such a revaluation.