China cuts US Treasury holdings to lowest level since global financial crisis
- China’s holdings of US Treasuries slid to US$859.4 billion in January from US$867.1 billion in December, representing a sixth straight monthly decline
- China’s holdings fell to their lowest point since May 2009 amid dropping yields and growing threats of financial sanctions from Washington
China continued to cut its holdings of US Treasuries at the beginning of the year amid rising long-term interest rates, which slashed its returns on its overseas investments after the US Federal Reserve accelerated its lending cost increases last year.
As foreign holdings rose for a third straight month in January, China’s holdings slid to US$859.4 billion in January from US$867.1 billion in December, declining for the sixth straight month and marking their lowest point since May 2009, according to data released by the US Department of the Treasury on Wednesday.
Beijing has been increasingly wary of the US dollar’s dominance in international transactions as its relations with the US have deteriorated amid growing threats of financial sanctions from Washington. It has sought to diversify its investment portfolio, but the US remains its major investment market.
The reduction also came at the time when US Treasury yields continued to decline following the US Federal Reserve’s progressive interest rate increases last year.
The decline in January was more than double the US$3.1 billion cut in December, although slightly less than the decrease of US$7.8 billion in November.
China ratcheted up its US Treasury bond purchases starting in 2000, but its buying spree peaked in 2014, dropping below the symbolic US$1 trillion mark in April 2022.
