China has overtaken neighboring Japan to become the world’s second-largest creditor nation, despite Japan reaching a record high in total foreign assets.
According to data released by Japan’s Ministry of Finance, Japan’s net foreign assets climbed to an all-time high of 561.8 trillion yen, or around $3.5 trillion.
However, China moved ahead after its foreign assets increased at a faster pace, reaching 636.3 trillion yen. The growth was largely supported by China’s strong trade surpluses and current account balances.
The development comes just one year after Japan lost its long-held position as the world’s largest creditor nation to Germany.
Germany maintained the top spot globally with foreign assets totaling 675.5 trillion yen, supported by years of accumulated current account surpluses.
Japan’s Finance Ministry said one reason behind the country’s relative decline was the rising value of Japanese domestic assets owned by foreign investors, especially as Japanese stock markets strengthened.
At the same time, Japan’s overseas assets still grew by 8.5% to around 1,806 trillion yen.
The increase was driven in part by Japanese companies expanding investments in sectors such as finance, insurance, and transportation in countries including the United States and Switzerland.
