China Cuts U.S. Treasury Holdings to 15-Year Low
For years, China was the world’s biggest foreign holder of U.S. Treasuries. Now, its strategy is moving in a different direction.
Analysts say Beijing is trimming its exposure to Washington’s debt while quietly boosting reserves in gold and European currencies.
Macro investor Luke Gromen argues that the accumulation of gold is part of a long game: by encouraging citizens to save in bullion for two decades, Beijing has created a buffer against yuan depreciation. If the currency weakens, the domestic value of that gold rises, effectively protecting households while reinforcing financial stability.
Official data backs the trend. China’s Treasury holdings fell by nearly $26 billion in July alone, dropping to $730.7 billion — the lowest since 2009 and less than half of the record high from a decade earlier. At the same time, the People’s Bank of China has moved to make cross-border gold flows easier, extending the life of import permits and allowing them to be used repeatedly.
Meanwhile, economists suggest that Europe may be absorbing some of the capital leaving U.S. bonds. Standard Chartered’s Ding Shuang points to the growing size and liquidity of European debt markets, while Natixis’s Alicia Garcia-Herrero believes China is diversifying into euros, pounds, and francs as its trade ties with the region deepen.
Beijing has not confirmed a formal strategy, but the signals are clear: reliance on the dollar is being pared back, gold imports are being streamlined, and alternatives in Europe are being explored. For global markets, the shift raises questions about how quickly the world’s second-largest economy could reshape the balance of reserve assets — and what that means for the dollar’s dominance in the years ahead.
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