📉🇨🇳🇺🇸 China reduces its holdings of US bonds to the lowest level since 2008❗️
Beijing's holdings of US Treasury bonds have fallen to their lowest level since the global financial crisis, continuing a gradual and ongoing withdrawal over the years.
📊 What is happening?
• China was the largest foreign creditor to the United States in 2013, with holdings exceeding $1.3 trillion
• Today, the holdings have declined to nearly half that figure
• This decline has been ongoing for about a decade, with a relative acceleration after 2018
📌 Why is China reducing its exposure?
1️⃣ Diversification of reserves
Increasing gold holdings and non-dollar-denominated assets.
2️⃣ Reducing interest rate volatility risks
Rising US yields mean paper losses on older bonds.
3️⃣ Resetting the financial relationship with Washington
Amid rising geopolitical and trade tensions.
4️⃣ Supporting the yuan and managing domestic liquidity
Selling some bonds provides dollar liquidity when needed.
⚖️ Is this a “abandonment of the dollar”?
Not entirely.
• China remains one of the largest holders of US bonds.
• The dollar still constitutes a major part of global reserves.
• What is happening is a gradual rebalancing, not a sudden shock.
🌍 In summary:
The financial relationship between the largest economies in the world is shifting from “deep interconnection” to “calculated dependence.”
