{"id":416586,"date":"2026-02-09T18:36:48","date_gmt":"2026-02-09T18:36:48","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/416586\/"},"modified":"2026-02-09T18:36:48","modified_gmt":"2026-02-09T18:36:48","slug":"china-might-be-beginning-to-back-away-from-u-s-debt-as-investors-get-nervous-about-overexposure-to-american-assets","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/416586\/","title":{"rendered":"China might be beginning to back away from U.S. debt as investors get nervous about overexposure to American assets"},"content":{"rendered":"\n

If there\u2019s one thing that catches the attention of the second Trump administration, it\u2019s how foreign investors behave toward U.S. assets. Perhaps most notably, it\u2019s their attitude toward the safe haven of U.S. Treasuries. <\/p>\n

Last month, Deutsche Bank<\/a> earned the ire of Treasury Secretary Scott Bessent after one of its analysts suggested foreign investors may leverage their holdings of U.S. borrowing and equities against the White House\u2019s threats over the sovereignty of Greenland. While Bessent dismissed the \u201cirrelevance\u201d of Denmark\u2019s holdings of American debt<\/a>, Trump eased up on his tariff rhetoric after the bond markets hiccuped.<\/a><\/p>\n

The Trump administration is therefore unlikely to be pleased with reports this week that Chinese banks had been urged to limit their holdings of U.S. Treasuries. Bloomberg<\/a> reported this morning, citing unnamed sources, that Chinese regulators had advised financial institutions against holding large amounts of U.S. government debt because of questions about volatility and security. <\/a><\/p>\n

Minding the Bloomberg report, UBS\u2019s Paul Donovan noted this morning that it is nevertheless of note that foreign investors are being advised to rethink their strategy. He said the report \u201cdoes not include the official holdings, and China\u2019s banks are not major players in the U.S. Treasury market. Nonetheless, the idea that international investors may be less inclined to buy U.S. Treasuries in the future (without dumping existing holdings) is getting attention in markets.\u201d (China is the third-largest holder of U.S. Treasuries.<\/a>)<\/p>\n

Indeed, any jitters in China are only playing into wider questions about whether investors should be hedging themselves against headwinds to the dollar. As Chris Turner, ING\u2019s global head of markets wrote this morning<\/a>: \u201cMainland China and Hong Kong together held $938 billion of U.S. Treasuries as of last November. Comments like these come at a vulnerable time for the dollar, when the dollar diversification theme is rife.\u201d<\/p>\n

China could not inflict the level of damage on the U.S. bond market that other nations theoretically may wield. Japan, for example, holds nearly double the amount of Treasuries that China owns, with the U.K. also owning some $888 billion in U.S. borrowing as well.<\/p>\n

But this morning\u2019s report does speak to a trend emerging from the BRIC (Brazil, Russia, India, China) nations in the second Trump presidency: the selling off or rolling over of America\u2019s debt. The latest data from the Treasury for November 2025 shows holdings by these nations are generally on a downward trajectory.<\/p>\n

Story Continues <\/p>\n

Brazil, for example, held $229 billion in American Treasuries in November 2024, and 12 months later, this had slipped to $168 billion. In India, November 2024 saw the nation holding $234 billion in Treasury holdings and by November 2025, this had reduced to $186.5 billion.<\/p>\n

China has followed a similar, but not identical, path. In November 2024 it owned $767 billion in U.S. Treasuries, which steadily increased to more than $900 billion in August 2025. A run-down then ensued, to $888.5 as of November 2025.<\/p>\n

As Turner observed in November, BRIC countries are \u201cquietly leaving the Treasury market.\u201d He added: \u201cWe think the decline in India\u2019s holdings probably relates to FX intervention to support the rupee, but suspect there are also geopolitical factors at play too. However, this year has shown that the private sector is more than willing to buy Treasuries, and our call for a weaker dollar in 2026 is based on foreign investors increasing their hedge ratios on U.S. assets rather than selling them outright.\u201d<\/p>\n

There\u2019s also little evidence to suggest that foreign investors have, or would, use their holdings in American assets as a tool to discipline the Oval Office.<\/p>\n

As Innes McFee, CEO of Oxford Economics, exclusively told Fortune at the end of January: \u201cIt\u2019s a convenient story aligned to political narratives, but the reality is there\u2019s no real evidence of capital outflows out of U.S. assets.\u00a0What there is evidence of is that the rest of the world is hugely exposed to U.S. assets and historically much more exposed than it\u2019s ever been, partly because of the Magnificent Seven and the AI trade and all of that sort of stuff.\u201d<\/p>\n

He continued: \u201cI think what happened last year was a sudden realization of, \u2018We still want to be exposed to the U.S., we don\u2019t want to sell our holdings in such a fast-growing economy, but we do want to hedge our exposure.\u2019 And so what you saw amongst a lot of pension funds around the world that invest in U.S. assets was a hedging of that exposure.\u00a0That\u2019s how you can have a situation where the dollar falls, but there\u2019s no capital outflow. For years, people have talked about China weaponizing its holdings of U.S. Treasuries\u2014I don\u2019t think that there\u2019s much credibility in those sorts of statements.\u201d<\/p>\n

This story was originally featured on Fortune.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"If there\u2019s one thing that catches the attention of the second Trump administration, it\u2019s how foreign investors behave…\n","protected":false},"author":2,"featured_media":416587,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,891,1294,54194,16065,66085,56,54,55],"class_list":{"0":"post-416586","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-china","10":"tag-economy","11":"tag-foreign-investors","12":"tag-scott-bessent","13":"tag-u-s-treasury","14":"tag-uk","15":"tag-united-kingdom","16":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/416586","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=416586"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/416586\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/416587"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=416586"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=416586"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=416586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}