China cuts US Treasury holdings to 14-year low amid persisting security concerns, geopolitical tensions

China cut its holdings of US Treasuries for a third month in a row in June, reducing its stake by US$11.3 billion to US$835.4 billion

Earlier this month, former central bank adviser Yu Yongding called the security of Chinese holdings an increasingly geopolitical issue

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China cut its holdings of US Treasuries by US$11.3 billion to US$835.4 billion in June. Photo: Bloomberg

Published: 8:30pm, 16 Aug 2023

China cut its holdings of US Treasuries in June to the lowest since May 2009, as worries over the security of its overseas assets persisted amid Washington’s de-risking endeavours.

The world’s second-largest economy reduced its holdings by US$11.3 billion to US$835.4 billion in June, representing a cut for the third month in a row, according to data released by the US Department of the Treasury on Tuesday.

China has cut its holdings by US$103 billion in the past year to June, or 11 per cent of its total. It has only raised its holdings in two months, including by US$20.3 billion in March and US$320 million in July 2022.

Japan, the world’s largest foreign buyer, also reduced its holdings by US$127.1 billion in the same period, reflecting concerns over the aggressive interest rate increases by the US Federal Reserve. Bond prices usually fall when interest rates increase.

However, the United Kingdom increased its holdings by US$55 billion and Belgium by US$58.9 billion during the same period to June.

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