There’s a persistent belief, echoed in headlines and political rhetoric, that “China runs America” through its financial muscle. While that statement might sound like a provocative oversimplification, it is rooted in real economic interdependence, with China playing a significant—though evolving—role in the American financial system. From vast holdings of U.S. Treasury securities to direct investments in American businesses and real estate, Chinese capital has, for years, been a quiet but powerful force in the American economy. But the true picture is more nuanced. China doesn’t run America, but it does own a significant stake in its economic machinery, and that influence has implications for policy, diplomacy, and national security.
At the heart of the “China money runs America” narrative is the issue of U.S. debt. For many years, China was the largest foreign holder of U.S. Treasury securities. At its peak in 2013, China held over $1.3 trillion in American debt, essentially acting as the lender that financed America’s massive budget deficits. Today, that figure has declined sharply. As of December 2024, China held about $759 billion in U.S. Treasuries—a 14-year low. This marks a steep reduction in holdings, driven by China’s desire to diversify its foreign exchange reserves and reduce exposure to U.S. fiscal and monetary policy risks. Still, even at this reduced level, China remains one of the largest foreign creditors to the United States, second only to Japan.
The concern over China’s holdings isn’t just about the numbers; it’s about leverage. Theoretically, if China were to dump all its U.S. debt holdings overnight, it could send shockwaves through global financial markets. Interest rates could spike, bond markets could crash, and the dollar could take a hit. But such a move would be mutually destructive. China’s economy depends heavily on a stable U.S. market to consume its exports, and destabilizing the U.S. financial system would harm China’s own economic interests. In short, China has a gun pointed at the U.S. economy, but pulling the trigger would blow a hole through both countries. This is the paradox of financial interdependence in a globalized world.
Beyond Treasuries, Chinese capital has permeated various sectors of the American economy. Over the past two decades, Chinese investors have poured billions into American real estate, agriculture, manufacturing, and technology. Between 2000 and 2020, Chinese firms invested over $180 billion in the United States. Iconic acquisitions like the 2013 purchase of Smithfield Foods, America’s largest pork producer, by China’s WH Group, sent alarms ringing in Washington. Similarly, Chinese ownership in tech and AI startups raised concerns over intellectual property theft and data security. The U.S. government, in response, has ramped up scrutiny of foreign investments, particularly those linked to strategic industries. The Committee on Foreign Investment in the United States (CFIUS) now routinely blocks or unwinds deals deemed to pose national security risks.
Even at the state and local level, Chinese money has found fertile ground. China has invested in U.S. infrastructure projects, solar farms, and even school districts through the EB-5 visa program, which allows foreign nationals to obtain U.S. green cards in exchange for substantial investments that create American jobs. While these programs have brought in capital and created economic activity, they have also opened up avenues for influence and raised questions about local dependence on foreign funding.
Another area of concern is academia and research. Chinese funding of American universities and research institutions has grown over the years, with some universities receiving millions in donations and grants from Chinese entities. Critics argue that this funding can come with strings attached, potentially influencing academic freedom and research priorities. The U.S. government has cracked down on undisclosed Chinese funding through initiatives like the China Initiative launched by the Department of Justice, although the program has faced criticism for targeting Chinese-American researchers and chilling scientific collaboration.
Yet despite all the rhetoric and rising suspicion, China’s actual influence in terms of economic control is limited by structural realities. The U.S. economy remains the most powerful and dynamic in the world, with a GDP surpassing $27 trillion in 2024. China’s GDP, while growing, remains significantly smaller and is underpinned by state-led capitalism, a high level of debt, and a shrinking working-age population. Moreover, many Chinese investments in the U.S. are passive—such as purchasing government bonds or real estate—and do not equate to operational control or political leverage.
The narrative that “China runs America” often overlooks the reciprocal nature of global capital flows. American companies are deeply embedded in China as well. U.S. firms like Apple, Tesla, Nike, and Boeing rely heavily on Chinese manufacturing, supply chains, and consumers. In 2023, U.S. companies invested over $8.4 billion in China, and many American corporations derive a significant portion of their revenue from the Chinese market. This mutual dependency creates both opportunities and vulnerabilities for both nations.
Geopolitical tensions—especially in the wake of the U.S.-China trade war, the COVID-19 pandemic, and rising military confrontations in the Taiwan Strait—have made economic decoupling a buzzword in Washington and Beijing alike. But true decoupling is easier said than done. While some American companies are moving supply chains to other countries like India, Vietnam, and Mexico, the reality is that China remains a manufacturing powerhouse with unmatched scale and efficiency. Meanwhile, China’s own attempts to insulate itself from Western capital—through “dual circulation” and a push for indigenous innovation—have been only partially successful.
What’s clear is that the era of blind economic integration is over. The U.S. is actively working to reduce strategic dependence on China, particularly in critical sectors like semiconductors, pharmaceuticals, and rare earth minerals. The CHIPS and Science Act, passed in 2022, allocates over $50 billion to boost domestic semiconductor production and reduce reliance on Asian supply chains. Similarly, executive orders have banned American investments in certain Chinese tech sectors and restricted the export of advanced AI chips to China.
China may not run America, but its financial entanglement with the U.S. economy gives it significant influence and leverage—just as America’s economic footprint in China gives Washington a measure of control as well. The relationship is one of uneasy interdependence, not domination. Going forward, the challenge for U.S. policymakers will be to strike a balance between protecting national interests and maintaining the openness that has made America an economic superpower.
To suggest that China “runs” America is to ignore the complexity of the global financial system and the strategic calculus of both nations. What we are witnessing is not a one-sided takeover, but a high-stakes economic dance between two superpowers—each trying to hedge its bets, project strength, and navigate an uncertain global future. The money may flow in both directions, but the control remains fragmented, contested, and subject to the larger currents of geopolitics.
