President Donald Trump's first nine months back in office have brought a flood of foreign capital into U.S. markets, but not everyone is joining the party.
According to Treasury Department data, foreign investors purchased a net $2 billion of U.S. securities in July 2025, marking the third consecutive month of net inflows. Overall, foreign investors have purchased nearly $1.7 trillion worth of stocks and bonds in the past year alone.
Year to date, net foreign purchases of American assets reached $743.2 billion, a pace far ahead of the $214.5 billion seen during the same period last year, and also well above the $555.4 billion recorded in the first seven months of 2023.
Since Trump's election victory in November 2024, foreign net purchases of U.S. assets have totaled $1.07 trillion.
The numbers paint a picture of a robust vote of confidence from global investors—particularly in America's deep capital markets and relative economic strength.
Demand For Treasuries Remains Robust
Treasury bonds, often seen as a proxy for global trust in the U.S. economy, remain in high demand. In the past year, net foreign purchases of U.S. Treasuries totaled $626.3 billion.
In the first seven months of 2025 alone, foreign private and official entities added $419.1 billion in Treasuries to their portfolios. That's nearly half of the total foreign inflows into U.S. assets over the same period.
U.S. equities, meanwhile, saw even stronger demand. Net inflows into stocks reached $929.1 billion over the past 12 months, as Wall Street's record-setting rally and resilient earnings drew capital from across the globe.
But there's one glaring exception: China.
Why Is China Selling U.S. Bonds?
Beijing has been steadily reducing its holdings of U.S. Treasury securities, slashing them from $784.3 billion in February to $730 billion as of July 2025.
The notable $54.3 billion drop in Treasury holdings suggests active selling or refusal to reinvest maturing debt by Beijing, as the performance of U.S. Treasury bonds has been positive: The iShares U.S. Treasury Bond ETF (NYSE:GOVT) is up 3% year to date.
This is happening despite a broader wave of global buying. So, what’s behind China's pullback?
Part of the answer lies in geopolitics. Trump's aggressive tariffs on Chinese goods have reignited trade and financial tensions between the world’s two largest economies. According to TradeWarTracker, China now faces an average U.S. tariff rate of 30%, the fourth highest globally after Brazil (46.5%), India (43%) and Switzerland (38.6%).
At the same time, Beijing is doubling down on gold, underscoring a clear pivot away from dollar-based reserves. The People’s Bank of China increased its gold holdings for the ninth straight month as of July, reaching 2,298.53 tons.
China's Tech Story Gains Domestic Appeal
There's also a growing belief among Chinese investors that the future lies at home.
Michael Hirson, analyst at 22V Research, said in a note this week that confidence in China's tech sector has surged since the "DeepSeek moment" in January, when China's AI and semiconductor industries showed they could challenge global players.
Hirson said this belief is fueling both retail and institutional investment in Chinese electric vehicles, biotech, and chip design, adding that "the domestic innovation story is very real," even if the patriotic tone around it is reaching "a fevered pitch."
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