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
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.
However, the United Kingdom increased its holdings by US$55 billion and Belgium by US$58.9 billion during the same period to June.
China’s reduction of its US Treasuries came as deteriorating relations with Washington have raised domestic concerns over US dollar hegemony, and subsequently security of its overseas assets, a majority of which are US dollar dominated.
Security is one of the three goals highlighted by the State Administration of Foreign Exchange, which oversees China’s US$3.2 trillion foreign exchange reserves. Liquidity and ensuring the value of assets are increased or at least maintained are also included.
The security of Chinese holdings has increasingly become a geopolitical issue