Archive · 6 Oct 2026
Dalio Warns China and Japan Could Reduce Treasury Demand
The U.S. government borrows money by selling bonds called Treasuries.
Ray Dalio says China and Japan may buy fewer of these bonds or reduce the ones they already own.
That could make it harder or more expensive for the U.S. to borrow.
Japan and China have already reduced their reported Treasury holdings.
U.S. Treasury yields have risen, and investors are also worried about government borrowing and inflation.
Treasury Secretary Scott Bessent says economic growth and spending cuts can help change the borrowing trend.
Dalio also says some large technology companies may have trouble finding enough money for their artificial intelligence spending.
He warned that debt repayments or other pressures could cause an AI bubble to burst.
Ray Dalio said China and Japan may reduce demand for U.S. Treasuries, potentially adding pressure to U.S. borrowing.
Dalio warned the United States could face a debt crisis within three years, while Treasury Secretary Scott Bessent said growth and spending cuts would help curb borrowing.
Japan’s Treasury holdings fell by $12.8 billion in July to about $1.1 trillion; China’s reported holdings were about $618 billion.
U.S. 10-year Treasury yields were around 5.3%, near their highest levels since 2002, amid concerns about borrowing and inflation.
Dalio said major technology companies spending heavily on AI are facing funding pressure and warned that factors such as loan repayments could burst an AI bubble.
- Who
- Ray Dalio, founder of Bridgewater Associates; Treasury Secretary Scott Bessent; and the governments of China and Japan.
- What
- Dalio warned that China and Japan may reduce demand for U.S. Treasuries and raised concerns about U.S. debt and AI-company funding.
- When
- Dalio made the comments in an interview on Tuesday; the article also cites July Treasury-holdings figures.
- Where
- The interview was with Bloomberg Television in Singapore.
- Why
- Dalio cited geopolitical and economic issues affecting China’s relationship with the U.S., Japan’s interest in retrieving some of its lending, and pressures facing borrowers and AI companies.
Dalio’s warnings
Bessent’s reassurance
U.S. borrowing outlook
Dalio’s warnings
Dalio warned that weaker demand from China and Japan could add to pressure on U.S. debt, and said a debt crisis could occur within three years.
Bessent’s reassurance
Bessent said economic growth and spending cuts would start to change the path of government borrowing and “bend the curve.”
- Foreign reliance
- The U.S. depends on foreign investors for about a third of its debt.
- Japan holdings
- Japan’s Treasury holdings fell by $12.8 billion in July to about $1.1 trillion.
- China holdings
- China’s reported Treasury holdings were about $618 billion in July, down from a peak of $1.3 trillion in 2013.
- Belgium holdings
- Belgium’s reported Treasury holdings stood at $470.7 billion; analysts cited in the article say some Chinese holdings may be held through other countries.
- Treasury yields
- Yields on 10-year U.S. Treasuries were around 5.3%, near their highest levels since 2002.
- Bond performance
- Global bonds had lost 3% and Treasuries 2.8% during the year, according to Bloomberg data.
- Dalio’s debt warning
- Dalio said the U.S. could face a debt crisis within three years.