How Much do China, Mexico, and Canada Own? USD, Gold, Treasuries, and U.S. Equities
Our frenemy trading partners—China, Mexico, and Canada—own U.S. dollars, treasuries, and equities. How much? Who owns more of the U.S. than the others?
Let’s look at this data:
Foreign Exchange Reserves
China has a massive $3.25 trillion foreign exchange reserve balance in USD due to its large trade deficit, partially responsible for the current trade war (they also blatantly steal IP without repercussions). Euros, yen, and pounds make up 40-50% of China’s foreign exchange reserves.
Mexico has $233 billion, which is modest compared to China. We are Mexico’s largest trading partner, and they want a stable peso and trade.
Canada has the least reserves since USD and CAD are used interchangeably in North American trade. At $124 billion, it will be interesting to see what happens with continued USD weakness.
China’s reserves dwarf those of Mexico and Canada by over 10x and 25x, respectively, due to its export-driven economy and global trade dominance.
Gold Reserves
China has 2,200 tonnes, worth $242 billion. This is about 5% of its total reserves, which have been increasing since 2020 as a hedge against USD reliance.
Mexico: 120 tonnes, worth $13 billion. This is also about 5% of their reserves, without recent increases.
Canada sold all its gold reserves by 2016. Maybe it is because they mine 200 tonnes a year in Canada.
China is long gold, Mexico knows when to hold ‘em, and Canada’s zero-gold policy is unique among major economies.
U.S. Treasuries
China owns approximately $785 billion in U.S. bonds. It is the second-largest foreign holder (behind Japan’s $1.17 trillion), down from $1.3 trillion in the early 2010s, indicating gradual diversification. In other words, they have sold 40% of their massive position in U.S. treasuries in the last decade. Not a good move, friend.
Mexico owns $130 billion. Canada: $320 billion.
This is a geopolitical story as China divests, Mexico invests, and Canada significantly invests in U.S. treasuries.
U.S. Equities
China: $370–$720 billion, with ~25% in private equity.
Mexico: $50–$100 billion.
Canada: $500–$700 billion. This is mostly still in expensive mutual funds with active management, as they have not discovered Jack Boggle north of the U.S. border.
Mexico’s and Canada’s holdings correspond to their smaller GDPs ($1.8 trillion and $2.2 trillion, respectively, compared to China’s $18 trillion).
Frenemy Trading Partners
China is Frenemy number one and they have been diversifying from U.S. assets for the better part of a decade. Buy gold, sell treasuries.
Mexico is more like the Wild West, now focused on stability. Reserves and treasuries support the peso and trade with the U.S., with limited gold and equity, reflecting conservative policy.
Canada prioritizes liquid, USD-denominated assets (treasuries, equities) over gold, leveraging U.S. proximity and CAD stability. This is our best frenemy, but they must get their act together. Elections soon.
May you live in interesting times. We are in a trade war with our best and worst trading partners, who all own a bit of us.
Economic integration and geopolitical leverage will dictate how much China, Mexico, and Canada own of the U.S.