The United States (US) is currently facing a major threat stemming from the potential withdrawal of investments by Asian countries and BRICS alliance members from dollar-based financial assets. If this trend persists, the US could see a capital flight amounting to approximately USD 7.5 trillion, equivalent to IDR 122,000 trillion, including bonds and government securities.

For decades, Asian nations have pursued an export-driven economic model aimed at the US market, reinvesting their trade surpluses into American financial instruments. However, shifts in the global landscape and the protectionist policies implemented under President Donald Trump began to disrupt these capital flows.

Tariff measures and trade wars have sparked frustration among developing countries. As geopolitical tensions and economic pressures mount, many nations are opting to diversify their foreign exchange reserves and reduce reliance on the US dollar.

Several global investment managers told Bloomberg that if this capital outflow from US dollar-based assets is not brought under control, the economic outlook for the US could become bleak. BRICS countries—especially China—are leading the movement. Since early 2024, China has reportedly sold around USD 150 billion worth of US bonds and treasury notes. The proceeds have mostly been redirected into alternative assets such as gold and local currencies.

“We are living in a world order that is shifting, and I’m not sure we’re going back to what it once was,” said Virginie Maisonneuve, Chief Investment Officer at Allianz Global Investors, as quoted by Watcher Guru on Monday (June 1). She added that this transformation is part of a broader evolution of the post-WWII global system, driven by China’s rising influence in the economic and technological spheres, now challenging US dominance.

Drop in US Dollar Bond Issuance

According to the latest data from Dealogic, the issuance of dollar-denominated bonds by foreign countries has sharply declined—by 19 percent in 2025 compared to the same period last year. In the first five months of 2025 alone, there was a USD 86.2 billion decrease in investments in US bonds and treasuries. Conversely, investments in assets denominated in local currencies surged to a record-high of USD 326 billion—the highest level in the past five years.

This trend indicates a strategic shift in global finance, where emerging economies prefer to invest in domestic financial instruments to take advantage of higher yields and strengthen their economic independence.

Analysts argue that this shift by BRICS and Asian countries not only limits US funding options but also undermines the dollar's supremacy in the international financial system. Even European nations, traditionally US allies, are beginning to distance themselves from Washington’s fiscal policies.

“This development has likely expanded the investor base and led to increased issuance of local currency bonds throughout 2025,” said Johnny Chen, Portfolio Manager at William Blair.