China continues to sell US bonds, dropping to third place globally, increasing gold holdings while reducing exposure to the dollar?

According to data released by the U.S. Treasury last Friday, China has continued to sell U.S. Treasuries and has been overtaken by Japan and the United Kingdom, falling to third place globally in terms of U.S. Treasury holdings. Many believe that China's recent reduction in U.S. Treasuries highlights Beijing's efforts to diversify its reserves and no longer rely heavily on the United States. Since Trump initiated the tariff war, it triggered a comprehensive dumping of U.S. Treasury bonds, the dollar, and U.S. stocks that month, making this data particularly noteworthy.

China continues to sell US debt and has been caught up by Japan and the UK.

In 2019, China was still the largest holder of U.S. Treasury bonds, but it was later surpassed by Japan. The latest data from March shows that the UK has surpassed China for the first time in over twenty years.

Currently, Japan holds 1.13 trillion in US Treasury bonds, the UK holds 779.3 billion dollars, while China holds 765.4 billion dollars, ranking third.

Image source: Financial M Square As of March data, the world has still not sold off U.S. bonds.

Since President Trump initiated an aggressive tariff war and repeatedly accused America's economic partners of "deceiving" the United States, the demand from foreign investors has been the focus of discussions in the bond market. The comprehensive sell-off of U.S. Treasuries, the dollar, and U.S. stocks was triggered after the "Liberation Day" on April 2.

However, as of the end of March, there has been no comprehensive dumping of U.S. Treasuries by governments around the world. In March, the holdings of government bonds in countries such as Japan, the United Kingdom, Canada, and Belgium all increased. China, on the other hand, achieved a net sell of $27.6 billion in long-term U.S. Treasuries.

Japan's holdings have increased for the third consecutive month, reaching 1.13 trillion USD. Data shows that Canada's reserves increased by 20.1 billion USD, reaching 426.2 billion USD.

According to Bloomberg citing market analysts, the U.S. Treasury bonds held by Belgium include custodial accounts from China. In March, Belgium's holdings of U.S. government bonds increased by 7.4 billion USD, reaching 402.1 billion USD.

The Cayman Islands is regarded as a popular registration location for leveraged investors such as hedge funds, with holdings increasing by $37.5 billion to reach $455.3 billion.

China has been buying gold to diversify its reserves.

Many people believe that China's recent reduction in US Treasury holdings highlights Beijing's efforts to diversify its reserves and reduce its dependence on the United States. The People's Bank of China has been continuously purchasing gold since November of last year, which has also fueled the recent trend in gold prices.

( Gold approaches three thousand dollars, frequently hitting record highs. The People's Bank of China resumes gold purchases, increasing holdings for three consecutive months, supporting the Renminbi ).

But former U.S. Treasury official and current member of the Council on Foreign Relations, Brad Setser, stated on X that he believes China's shift is "shortening the duration of its investment portfolio, such as increasing deposits, rather than any real move away from the dollar."

However, reducing the holdings of long-term government bonds and increasing short-term liquid dollar assets is not necessarily a way to avoid the risks of U.S. Treasuries. This is because if there are any changes, China can quickly retrieve dollars or choose not to purchase again after the maturity of short-term government bonds, achieving the effect of being able to reduce dollar assets at any time.

The currently announced data is from March, which is before the official start of the tariff war. Whether central banks in various countries have reduced their holdings of U.S. Treasury bonds thereafter will probably have to wait for next month's data release to provide any clues.

( In the US-China tariff struggle, will China use $760 billion in US Treasury bonds as a weapon? )

This article discusses how China continues to sell U.S. bonds, falling to third place globally, increasing gold holdings while reducing exposure to the dollar? First appeared in Chain News ABMedia.