A concept photo of currencies and financial market Illustration: VCG

Japan has slipped to third place among the world's largest net creditors in 2025, overtaken by China, marking another decline in global rankings after losing the top spot to Germany in 2024, according to media reports, citing latest data released by Japan's Ministry of Finance on Tuesday.

An analyst said that China's steady rise in net external assets and its continued improvement in global ranking is not the result of short-term data fluctuations, but rather the long-term realization of the country's comprehensive economic strength, financial stability and diversified overseas investment.

As a core indicator of a nation's external wealth and financial power, net external assets hold significant macroeconomic reference value and serve as an important window into a country's global financial standing. Net external assets refer to the total value of overseas assets held by a country's residents and institutions minus liabilities owed to foreign entities, with adjustments made for exchange rate fluctuations, according to media reports.

According to data released by Japan's Ministry of Finance, Japan's net external assets reached 561.8 trillion yen ($3.5 trillion) by the end of 2025. Although the total maintained positive growth, Japan slipped from second to third place globally after being overtaken by China in 2025, following its loss of the top spot to Germany in 2024, Reuters noted.

This figure essentially represents the stock outcome of a country's long-term cross-border capital allocation and overseas wealth accumulation. It directly reflects a nation's external financial creditor strength, its ability to withstand cross-border risks, and the level of its global capital deployment, analysts said.

"China's overtaking of Japan to become the world's second-largest net creditor nation is not due to short-term market volatility, but rather the long-term structural outcome of a solid domestic economic foundation, continuous optimization of cross-border asset allocation, and steady advancement of financial opening-up," Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times.

In 2025, Germany remained in first place with net external assets of 675.5 trillion yen, according to Reuters. China's net external assets stood at $4.0713 trillion at the end of 2025, per data from the State Administration of Foreign Exchange.

"The data showed that China's external asset structure continued to improve in 2025. Overseas physical asset deployment and diversified financial asset allocation are advancing in tandem, with steady enhancement in asset quality," said Yang.

At the same time, external liabilities remain stable and controllable, while foreign capital's allocation to China maintains a steady pace. The continuous optimization of the asset-liability structure is driving sustained expansion of China's net external assets, according to Yang.

Both Germany and China have seen their net external assets boosted by annual trade surpluses, while Japan saw the growth of its net ⁠external assets contained partly because its external liabilities also swelled significantly, according to Reuters.

Analysts also pointed out that a stable currency exchange rate of yuan and euro boosted the net external assets growth of China and Germany, whilst Japanese yen saw some fluctuations during the past year.