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Good morning Intriguer. I always measure a country’s diplomatic power by the popularity of its national day functions. A real scientific metric, I know. Most of the ‘big’ celebrations are just around the corner here, and DC folks are already clambering to nab invites to the ‘best’ ones.
The French and the Brits still draw some of the biggest crowds, and there’s no missing the commercial and cultural razzmatazz of the Italians, UAE, and Brazil.
But right there on top is the Japanese national day event, filled with cherry blossoms, mochi, and sushi (allegedly, because we’ve never been). So, if you’re reading this, Japanese Embassy in DC, you know where to find us! 😉
Anyway, onto today’s story on Japan’s slip as the world’s largest creditor.
PS — In just a few short hours, we’ll be chatting live with CNN’s legendary world-watcher, Fareed Zakaria. It’s online today (Wed), 4.30pm ET / 1.30pm PT. Join us here!
34%
That’s how far China’s BYD automaker just slashed prices in its home market, kicking off another price war and raising the spectre of more industry consolidation ahead.
Credit report
Japan just lost its title as the world’s top creditor nation for the first time in 34 years, with Germany’s $4T in net external assets now at #1, ahead of Tokyo’s $3.7T and Beijing’s $3.6T.
What does this even mean?
Japan is a ‘creditor’ because it owns more assets abroad than foreigners own in Japan (stocks, bonds, etc). When it’s vice versa, you’re a ‘debtor’.
We might instinctively like the sound of being a ‘creditor’ (you owe me) more than a ‘debtor’ (I owe you), but the pros and cons are pretty nuanced across borders.
In Japan’s case, there was a mix of factors at home and abroad that drove its investors and firms to stash their cash abroad for more than three decades:
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After Japan’s epic 1990s bubble popped, its central bank kept rates low to reflate
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That also kept Japan’s yen weak, making Japan’s exporters even more competitive
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And the resulting flood of cheap loans and foreign currency gave Japanese firms an arsenal to hoover up assets abroad where they could get a better return.
We’ve explored examples over the years, whether it’s Japan’s status as the single biggest holder of US government bonds ($1T), or Nippon’s bid to buy US Steel.
So… what’s changed?
Japan’s foreign assets actually just grew to another record high, so this drop to the world’s #2 creditor doesn’t necessarily reflect a shift in Japan’s trajectory.
Rather, it’s Germany’s trajectory that’s shifted, with a surge in its net assets reflecting…
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Germany’s recession, which Ozempicked its appetite for imports
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Strong global demand for Germany’s high-value exports (cars, machines), and
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A strong euro versus the yen, pumping the value of Germany’s foreign assets.
So where’s the intrigue?
Maybe ignore the breathless headlines about who’s winning gold or silver here.
Sure, it's true the biggest creditor countries are, on average, very rich. But so are the biggest debtor nations: in fact, the world’s biggest debtor is also history’s biggest economy and its most effective income-generating machine — the United States.
For us, the value lies less in the rankings, and more in the trajectories. Here are three:
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First, Germany has (as our special edition foreshadowed) proven semi-resilient, adapting to Russia’s energy shock to still make high-value stuff the world wants
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Second, while Germany is selling less of that stuff to China (now increasingly a competitor), it’s selling more to the US, Poland, and elsewhere, which hints at…
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Third, as President Trump tries to rebalance economic ties between the US and China, big US-aligned exporters like Germany and Japan could stand to win.
But a lot really depends on where the dust settles after Trump’s Liberation Day tariffs.
Intrigue’s Take
And speaking of those tariffs… there’s been a bit of talk lately drawing comparisons between this 2025 ‘Trump Shock’ and the ol’ ‘Nixon Shock’ of 1971:
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Nixon imposed 10% tariffs, ended dollar-gold convertibility, and pushed trading partners to rebalance currency valuations to revive US industry, while
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Trump has now imposed his own 10% (+) tariffs and escalated his rhetoric around currency manipulation and dollar alternatives, also in an attempt to revive US industry.
But while both used US economic might in an attempt to reshape the global economy, history has judged Nixon’s move as targeted, temporary, and ultimately successful, not just for the US, but for a broader world that eventually adapted then thrived.
As for the Trump shock…? This story points us in two different directions: first, it hints at the underlying resilience of advanced economies to withstand that shock; but second, it also hints at the very same imbalance Trump’s team says he’s trying to address via that shock in the first place — the notion that these big German and Japanese asset surpluses abroad just reflect weak demand at home, which he sees as harming partners like the US.
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Meanwhile, elsewhere…
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🇺🇸 UNITED STATES – Trump halts student visa applications. Comment: While this move will have its supporters, the broader signal of an across-the-board pause risks eroding America’s superpower (attracting the best and brightest), just as Trump 2.0 doubles down on efforts to sustain America’s tech edge. |
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🇨🇳 CHINA – Sorry, that’s not for sale. Comment: Two big trends on display here: one is the continued race to secure chokepoints like strategic port assets, as world powers lose trust in one another. The other is the role private firms (with quiet government links) now play to make it happen, whether in Panama, Darwin, or beyond. |
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🇮🇳 INDIA – Delhi cracks down on foreign CCTV. Comment: Delhi is worried about foreign intelligence agencies using compromised CCTV units to conduct espionage and transfer sensitive data offshore. But not just any agencies. Around 80% of the world’s CCTV cameras are made in China. |
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🇧🇷 BRAZIL – Amazon tribe sues NYT over internet exposure story. |
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🇹🇱 TIMOR-LESTE – ASEAN to get newest member in October? Comment: After years of paralysis by consensus, whether on Myanmar’s civil war or China’s vast maritime claims, the significance of this ASEAN expansion is probably just the way it shows the bloc can indeed still agree on stuff, even if it takes 14 years. |
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🇪🇸 SPAIN – Madrid fails to get minority languages on EU list. Comment: No surprises here. Getting a language listed requires the unanimous support of all 27 EU members. But just think how many of them have their own minority language dynamics that’d be unleashed if Spain’s got pushed through. Less clear is whether those separatist parties will now punish Sanchez by, say, blocking his efforts to raise defence spending to meet NATO targets. |
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🇿🇼 ZIMBABWE – A charge to listen to radio? |
Extra Intrigue
Intrigue jobs board 💼
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Director, Head of Geopolitical Strategy @ Novo Nordisk in Denmark
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Membership and Events @ American Foreign Service Association in DC
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Research Assistant @ United Nations in Santiago
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Programming and Content Specialist @ WEF in Beijing (6-month role)
Photo of the day
Credits: Gian Ehrenzeller / Nordsee Zeitung
Greetings from the Alps, where the hardworking girl above is one of thousands of locals now taking part in the annual Alpfahrt — farmers across the Austrian, Swiss, German, and Italian Alps drive their livestock back up to mountain pastures as the snow melts.
Today’s poll
How do you feel about international education's impact on host countries? |
Yesterday’s poll: Do you think being an ambassador is riskier now than it was 20 years ago?
⚡ Yes (76%)
📉 No (23%)
✍️ Other (write in!) (1%)
Your two cents:
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⚡C.D: “Violence, as well as disregard for the law and established norms, has escalated globally along with unhindered authoritarianism.”
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📉 L.E: “Nothing new here. Bullies with power have always pushed ambassadors as an easy target that plays well with their base.”
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✍️ E.K.M: “Depends entirely on where you’re stationed.”