![\"\"](\"https:\/\/www.liberalglobe.com\/wp-content\/uploads\/2025\/05\/image-102-1024x359.png\")
<\/figure>\r\n<\/div>\r\n\r\n\r\n<\/p>\r\n\r\n\r\n\r\n
China sold $27.6 billion worth of long-term U.S. Treasuries in March, falling for the first time in more than 20 years from the second-largest foreign holder of U.S. debt.<\/p>\r\n\r\n\r\n\r\n
Beijing now trails the United Kingdom, which took second place behind Japan, which has remained the largest foreign holder since 2019.<\/p>\r\n\r\n\r\n\r\n
Ease in gold purchases and risk aversion<\/strong><\/p>\r\n\r\n\r\n\r\n Meanwhile, China\u2019s central bank has just opened the treasury doors by dramatically increasing gold import quotas, allowing local banks to exchange dollars.<\/p>\r\n\r\n\r\n\r\n This is China silently saying that holding all those U.S. bonds is starting to look less like a prudent investment and more like playing roulette while the house is burning. We should think about it: Even if China were to convert a modest 10% of the $784 billion Treasury reserve it held in February into gold, it would send shockwaves through global markets. China is not simply hoarding gold for safety reasons \u2014 it is preparing for a currency earthquake.<\/p>\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n US Debt Holdings Shift<\/strong><\/p>\r\n\r\n\r\n\r\n Despite China\u2019s massive sell-off, total foreign holdings of US Treasury bonds rose by $233.1 billion in March to a new record of $9.05 trillion, according to data from the US Treasury Department released on Friday. China made a net sale of $27.6 billion in 10-year bonds, in a move widely interpreted as portfolio restructuring rather than a drastic exit from the dollar.<\/p>\r\n\r\n <\/p>\r\n\r\n\r\n\r\n What does Washington see?<\/strong><\/p>\r\n\r\n\r\n\r\n China appears to be \u201cshortening the average duration of its holdings,\u201d suggesting a more flexible strategy rather than a rejection of the dollar. Essentially, China is reducing the duration of the securities in its portfolio.<\/p>\r\n\r\n\r\n\r\n At the same time, Japan, the United Kingdom, Canada, and Belgium increased their holdings of U.S. government bonds, in the face of the Chinese wave of liquidation. However, the turmoil was not limited to government offices.<\/p>\r\n\r\n\r\n\r\n Trump\u2019s \u201cLiberation Day\u201d and the shock to the markets<\/strong><\/p>\r\n\r\n\r\n\r\n U.S. President Donald Trump caused turmoil in the markets when, on April 2, he announced new punitive tariffs, calling the day \u201cLiberation Day.\u201d<\/p>\r\n\r\n\r\n\r\n A weekend lull<\/strong><\/p>\r\n\r\n\r\n\r\n Fears have eased in recent days after talks between US and Chinese officials led to a partial easing of trade tensions. A US-UK trade deal was also announced earlier in May.<\/p>\r\n\r\n\r\n\r\n The shrinking of Chinese exposure to US debt amid rising geopolitical tensions is another sign of the reshaping of the global economic landscape. While this is not a \u201cflight from the dollar\u201d, the message is clear: Beijing is managing risks more aggressively than US economic policy.<\/p>\r\n\r\n\r\n\r\n The real question now is: will China continue to quietly withdraw its support, or is this a strategy of temporary flexibility?<\/p>\r\n\r\n The real question now is: will China continue to quietly withdraw its support, or is this a strategy of temporary flexibility?<\/p>\r\n\r\n\r\n Why is this happening?<\/strong><\/p>\r\n\r\n\r\n\r\n China\u2019s liquidation of US government bonds\u2014and its decline to third place behind the UK and Japan as the holder of these securities\u2014is not a coincidence. It reflects deeper geopolitical, economic and strategic shifts.<\/p>\r\n\r\n 1. <\/strong>Geopolitical tension with the US<\/p>\r\n\r\n\r\n\r\n China is in an ever-escalating strategic confrontation with the United States. The tensions include:<\/p>\r\n\r\n\r\n\r\n 2.<\/strong> De-dollarization<\/p>\r\n\r\n 3.<\/strong> Rising US interest rates \u2013 price losses<\/p>\r\n\r\n\r\n\r\n 4.<\/strong> Liquidity Management and Domestic Capital Needs<\/p>\r\n\r\n 5. <\/strong>Who is rising \u2013 and why<\/p>\r\n\r\n\r\n\r\n Japan remains the top performer due to long-standing strategic ties and a stable trade surplus with the US. The UK may appear to have risen sharply, but it largely functions as a financial center (London clearing) where securities are parked on behalf of others. The rise may reflect technical changes in where bonds are \u201cstored\u201d, not necessarily substantive investment decisions by London.<\/p>\r\n\r\n\r\n\r\n 6. <\/strong>What does this mean for the US and the markets?<\/p>\r\n\r\n China’s decision to dump US bonds and at the same time engage in massive gold purchases to bolster its foreign exchange reserves amid a trade war is heralding a monetary earthquake. This move did not come as a bolt from the blue as Beijing’s gradual withdrawal from US debt began during the period of sanctions … <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,391],"tags":[138,52,83,82,54,716],"class_list":["post-2826","post","type-post","status-publish","format-standard","hentry","category-financial-markets","category-market-analyses","tag-bonds","tag-china","tag-dollar","tag-gold","tag-japan","tag-uk"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/2826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/comments?post=2826"}],"version-history":[{"count":2,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/2826\/revisions"}],"predecessor-version":[{"id":2835,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/2826\/revisions\/2835"}],"wp:attachment":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/media?parent=2826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/categories?post=2826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/tags?post=2826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.liberalglobe.com\/wp-content\/uploads\/2025\/05\/image-104-1024x738.png\")
<\/figure>\r\n<\/div>\r\n\r\n\r\n![\"\"](\"https:\/\/www.liberalglobe.com\/wp-content\/uploads\/2025\/05\/image-106.png\")
<\/figure>\r\n\r\n\r\n\r\n\r\n
![\"\"](\"https:\/\/www.liberalglobe.com\/wp-content\/uploads\/2025\/05\/image-107.png\")
<\/figure>\r\n<\/div>\r\n\r\n\r\n\r\n
\r\n
\r\n
\r\n
\r\n