Recent data released by the U.S. Treasury Department reveals that China reduced its Treasury bond holdings in March of this year, bringing their holdings to a total of $765.4 billion, the lowest level since 2009. This move comes amid the pause in the tariff war agreed upon by both governments.
The cut marks a trend that could be repeated in the coming months, with China's exposure to US debt continuing to decline. A pattern that analysts link to a broader strategy of reducing geopolitical and financial risks. Beijing is diversifying its reserves, including non-dollar-denominated assets such as gold and other currencies, in an effort to reduce its dependence on the US dollar.
With this cut, China fell to third place among the largest creditors of US debt, surpassed by the United Kingdom, whose holdings rose to $779 billion. According to official US Treasury data, Japan remains the largest holder, holding more than $1.1 trillion in bonds.
China moved into third place among Treasury bond holders. Source: ticdata.treasury.gov.
The publication of this data comes within the framework of the recent agreement between Donald Trump and Xi Jinping. Both powers decided to reduce tariffs and suspend a large portion of their reciprocal trade agreements for 90 days.
The Chinese government's cuts contrast with the pattern observed in February when the first tariff measures were implemented when China had increased its holdings by more than $20 billion. This decision surprised many analysts and is associated with a more optimistic outlook following Trump's arrival at the White House.
But then, with the sale of Treasury bonds, everything points to a return to the broader strategy of de-dollarization. A movement that China is promoting alongside other countries and strategic allies. The plan is to build an international financial system less dependent on the dollar, amid fears of possible sanctions or restrictions like those imposed on Russia in previous years.
In fact, in the specific case of Russia, reports from the Eurasian Economic Union claim to have achieved 93% de-dollarization in regional trade. The announcement was made on May 16 by Deputy Minister of Economic Development Dmitry Volvach. Meanwhile, tensions between China and the US are entering a phase of tense calm. During this lull, China's de-dollarization strategy is likely to accelerate, marking a new stage in the economic rivalry.
The agreement between Trump and Jinping could be positive for the Bitcoin and cryptocurrency ecosystem, as it eases recession fears, fostering a rebound in the BTC market. Furthermore, with less trade tensions, the availability of Bitcoin mining hardware in the United States also stabilizes.
It's worth noting that, despite China's recent actions, the amount of U.S. Treasury bonds held by foreign countries surpassed $9 trillion last March. According to figures published by Reuters, global bond holdings reached a new all-time high: from $8.81 trillion in February to more than $233 billion in March. This estimate could undermine the global de-dollarization plan.
