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Japan Falls to Third-Largest Global Creditor as China Overtakes in 2025

Japan Falls to Third-Largest Global Creditor as China Overtakes in 2025. Source: Lenny K Photography from Sydney, Australia, CC BY 2.0, via Wikimedia Commons

Japan slipped to the position of the world’s third-largest net creditor nation in 2025 after China surpassed it in global rankings, despite Japan recording a historic high in net external assets, according to data released by the Finance Ministry on Tuesday.

Japan’s net external assets — which include overseas holdings by the government, corporations, and individuals minus foreign-owned domestic assets — increased 4.4% year-over-year to 561.75 trillion yen ($3.53 trillion). The figure marks the eighth consecutive year of growth, supported by strong overseas investments, foreign mergers and acquisitions by Japanese firms, and higher valuations of foreign securities owned by residents.

However, the increase was not enough to maintain Japan’s previous global standing. After losing its long-held top creditor position to Germany last year for the first time in 34 years, Japan has now fallen behind China as well. Germany remained the world’s largest creditor nation with net external assets totaling 675.5 trillion yen, while China ranked second at 636.3 trillion yen, based on International Monetary Fund data cited by the ministry.

China and Germany continued to benefit from large annual trade surpluses, which strengthened their overseas asset positions. In contrast, Japan’s external liabilities expanded sharply, limiting the overall rise in its net external assets.

A major factor behind the increase in liabilities was the strong performance of Japan’s stock market. Foreign investors holding Japanese equities contributed to a 62.2 trillion yen upward valuation in Japanese securities owned by non-residents.

Economists say Japan’s decline in the creditor rankings does not necessarily signal economic weakness, as the country still maintains substantial overseas wealth and strong foreign investment activity. However, the shift highlights China’s growing financial influence and Germany’s continued export-driven economic strength in the global economy.

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