Daijiworld Media Network - Tokyo

Tokyo, May 26: Japan has fallen behind China to become the world’s third-largest net creditor in 2025, despite recording its highest-ever level of external assets, according to Japan’s Finance Ministry.

The ministry said Japan’s net external assets — held by the government, businesses and individuals — rose 4.4 per cent from a year earlier to 561.75 trillion yen (about $3.53 trillion), marking the eighth consecutive year of growth.

However, the country lost its second-place position to China in global rankings, after having already been overtaken by Germany the previous year.

Germany remained the world’s top creditor nation with 675.5 trillion yen in net external assets, followed by China at 636.3 trillion yen, according to data compiled using International Monetary Fund figures.

Officials said Japan’s strong overseas investments, mergers and acquisitions, and gains in foreign securities contributed to the continued rise in its external assets.

Japanese companies have also expanded aggressively abroad, supporting long-term accumulation of overseas wealth.

However, analysts noted that Japan’s external liabilities also increased significantly, limiting its overall growth in global rankings.

The rise in liabilities has been linked to strong performance in Japanese equity markets, which led to a 62.2 trillion yen upward valuation of Japanese securities held by foreign investors.

Both Germany and China benefited from consistent trade surpluses, which helped strengthen their net external asset positions.

Despite the setback in rankings, Japan continues to maintain a historically high level of overseas financial strength, even as global economic shifts reshape the hierarchy of creditor nations.