An illustration show a US dollar bill and a calculator at a bank in Fuyang, East China’s Anhui Province. Photo: VCG
China’s holdings of US Treasury bonds edged down to $700.5 billion in September from $701 billion in August, according to US Treasury Department data released on Tuesday.
The data, released after the US federal government’s 43-day shutdown, marked the fifth month this year in which China slashed the holdings.
In July, China’s holdings of Treasuries had fallen to $696.9 billion, the lowest since October 2008, when holdings stood at $684.1 billion, according to Reuters.
China has gradually reduced its US Treasury holdings over the past decade. Since April 2022, China’s US Treasury holdings have remained below $1 trillion and have continued a downward trend, according to domestic news outlet thepaper.cn.
China reduced its holdings of US Treasury bonds by $173.2 billion in 2022, $50.8 billion in 2023, and $57.3 billion in 2024, thepaper.cn reported.
A Chinese analyst said China’s reliance on the US dollar for reserves, trade settlement and investment purposes has been dropping amid shifts in the global economic landscape.
“The gradual reduction of US Treasury holdings for China has occurred amid global volatility in recent years and growing preference among countries to make payment with their own currencies through various arrangements,” Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Wednesday.
The gradual weakening of the US dollar and domestic inflation in the US is also factor behind countries’ moves to cut their US Treasury holdings, Xi Junyang said.
China’s efforts to diversify its foreign exchange reserves in recent years by increasing holdings of other assets such as gold have also contributed, the analyst said.
Overall, global holdings of US Treasuries edged lower to $9.249 trillion in September, slightly below $9.262 trillion in August.
Japan remained the largest non-US holder of US Treasuries, with $1.189 trillion in September, its highest level since August 2022.
UK investors, the second- largest holder of US Treasuries, also cut their holdings to $865 billion in September, down from $904.3 billion in August.
China’s foreign exchange reserves totaled $3.3387 trillion at the end of September, up $16.5 billion, or 0.5 percent, from the end of August, official data with the State Administration of Foreign Exchange showed.
Supported by a steadily growing economy, China remains well positioned to maintain the stability of its foreign exchange reserves, the administration said.
China has also increased its gold holdings in a consecutive manner. According to the SAFE, the country’s official gold reserves reached 74.06 million ounces at the end of September, up 74.02 million ounces from a month earlier, the 11th consecutive monthly increase.