US Holds 60% Share in Global Financial Markets

By VirentaNews Staff — May 18, 2026

Executive summary — main thesis in 3 sentences (110-140 words)

The United States continues to outpace China in shaping global financial systems, not through brute economic size alone, but through institutional depth, market openness, and the enduring role of the dollar. While China has expanded its trade footprint and invested heavily in infrastructure abroad via the Belt and Road Initiative, its capital markets remain tightly controlled, limiting its ability to project financial power globally. This structural asymmetry ensures that, despite geopolitical competition, the US retains decisive advantages in liquidity, investor trust, and regulatory frameworks that underpin global capital flows.

Capital Markets Depth and Liquidity

Hard data reveals a stark imbalance in financial market maturity. The US hosts the world’s largest stock market, valued at over $44 trillion as of 2023, accounting for nearly 60% of global equity capitalization according to the World Bank and SIFMA. In contrast, China’s total stock market value stands at approximately $10 trillion, with less than half accessible to foreign investors due to regulatory barriers. US bond markets are equally dominant, with over $26 trillion in outstanding Treasury securities, serving as the global benchmark for risk-free rates. Foreign central banks hold about $5.5 trillion in US Treasuries, compared to just $230 billion in Chinese government bonds, per IMF COFER data. This deep liquidity makes US assets the default choice for global reserve managers, reinforcing the dollar’s role in 88% of all foreign exchange transactions, as reported by the BIS.

Key Players and Their Strategies

The Federal Reserve, Wall Street institutions, and multilateral bodies like the IMF and World Bank remain central to global financial governance, all areas where US influence is institutionalized. The Fed’s monetary policy decisions ripple across emerging markets, while American investment banks dominate cross-border M&A and securities underwriting. In contrast, China’s key financial actors—such as the People’s Bank of China and state-owned banks like the Industrial and Commercial Bank of China—operate within a closed, state-directed system that prioritizes stability over innovation. Although Beijing has promoted the yuan’s inclusion in the IMF’s Special Drawing Rights basket, its capital controls and lack of judicial independence deter widespread adoption. Even in regions where China exerts strong economic influence, such as Southeast Asia and Africa, trade settlements remain predominantly dollar-denominated, underscoring the limits of Beijing’s financial reach.

Trade-Offs in Financial Openness

The US model of financial openness carries risks, including vulnerability to speculative bubbles and market volatility, but it also generates immense benefits in the form of capital inflows, innovation, and global pricing power. By allowing foreign investors full access to its markets, the US effectively outsources debt financing while maintaining low borrowing costs—a privilege known as the “exorbitant burden” reversed into an advantage. China, by contrast, sacrifices global financial integration for domestic control, limiting capital flight and preserving policy autonomy. However, this comes at the cost of reduced foreign participation, lower currency credibility, and diminished influence in setting international financial standards. The trade-off is clear: Washington leverages openness to consolidate power; Beijing trades reach for control, ultimately constraining its systemic influence.

Why the Timing Favors the US Now

The current moment amplifies US strengths due to a confluence of global shocks and policy divergence. As inflation pressures mounted post-pandemic, the Federal Reserve’s aggressive rate hikes strengthened the dollar and attracted capital from emerging markets, including China. Meanwhile, Beijing’s zero-COVID policy until 2022 and subsequent uneven recovery weakened investor confidence, leading to capital outflows and yuan depreciation. Geopolitical fragmentation has further entrenched reliance on US financial infrastructure, as sanctions on Russia prompted even neutral countries to seek alternatives that still default to dollar-based systems. With SWIFT and US-dominated clearing networks remaining the backbone of global finance, efforts to create alternatives—such as China’s CIPS—have gained only marginal traction, processing less than 2% of global renminbi payments.

Where We Go From Here

Looking ahead, three scenarios emerge over the next 6–12 months. First, the status quo may persist, with the US maintaining financial dominance amid continued Chinese capital controls and modest yuan internationalization. Second, a global recession could trigger a flight to safety, further boosting demand for US Treasuries and widening the gap in financial resilience. Third, a breakthrough in China’s financial reforms—such as full convertibility of the yuan or liberalization of bond markets—could begin to challenge US dominance, though such a shift remains politically unlikely under current leadership. Each path underscores that structural advantages, not just economic size, define financial power.

Bottom line — single sentence verdict (60-80 words)

The United States remains the unrivaled leader in global financial systems not because of size alone, but due to deep, open markets, institutional credibility, and the dollar’s entrenched role—advantages that China, constrained by state control and limited transparency, cannot yet match despite its economic ambitions.

Source: Financial Times