Recent trends indicate that China is gradually reducing its holdings of U.S. dollar assets, particularly U.S. Treasury securities. As of December 2024, China’s Treasury holdings stood at approximately $759 billion, down from over $1.3 trillion in 2013. This decline reflects a strategic shift rather than a rapid sell-off, as China seeks to diversify its foreign exchange reserves.
Analysts suggest that this measured approach aims to minimize market disruptions while reducing reliance on the U.S. dollar. China’s central bank has also instructed state-owned banks to limit dollar purchases, further signaling a move towards de-dollarization. Despite these actions, U.S. Treasuries remain a significant component of China’s reserves due to their liquidity and stability.
While some speculate that China might leverage its U.S. debt holdings amid trade tensions, experts caution that a sudden sell-off could negatively impact both economies. Therefore, China’s strategy appears to focus on gradual diversification to safeguard its economic interests.
