[All That China] China Reduces U.S. Treasury Bonds – Holdings Drop to $765.3 Billion, Down $18.9 Billion

# Decline in China's U.S. Treasury Holdings by $18.9 Billion in March: A 14-Year Low China's U.S. Treasury holdings experienced a significant drop of $18.9 billion in March, reaching $765.36 billion, a level not seen since early 2009. This information was reported by Chinese financial outlets such as Sing Tao Daily and Economic Daily on the 17th, based on the Treasury International Capital (TIC) report from the U.S. Department of the Treasury. # Significant Sell-Off of Long-Term Treasurys The decline in China's U.S. Treasury holdings was largely due to a substantial net sell-off of long-term bonds, amounting to $23.5 billion in March. China also offloaded $19.0 billion worth of U.S. Treasurys across all maturities during this period. This sell-off marks the largest net reduction in long-term Treasury holdings since February 2023. # Market Turmoil and Declining Holdings This decline occurred amidst heightened global market volatility. On March 2, 2025, following former U.S. President Donald Trump's announcement of reciprocal tariffs, financial markets were disrupted. The value of U.S. Treasurys, traditionally considered safe-haven assets, unexpectedly fell during this turmoil. Analysts attribute the unusual sell-off to a deliberate move by governments, including those of China and Japan, to reduce their exposure to U.S. debt. As a result, China dropped to the third-largest holder of U.S. Treasurys globally, overtaken by the United Kingdom. The U.K. increased its holdings by $28.9 billion, reaching $779.3 billion, surpassing China’s $765.36 billion. Meanwhile, Japan, the largest holder of U.S. Treasurys, saw an increase of $4.9 billion in March, raising its holdings to $1.1308 trillion from $1.1259 trillion in February. # Erosion of China’s Position as a Leading Holder China, once the largest foreign holder of U.S. Treasurys until mid-2019, has significantly reduced its holdings between 2021 and early 2024. Since April 2022, China has consistently maintained holdings below the $1 trillion mark, marking 36 consecutive months below this level. In December 2024, China's holdings fell to $759.0 billion, the lowest since February 2009, reaching a nearly 16-year low. Market analysts suggest that China's continuous reduction in U.S. debt holdings is part of its strategy to stabilize its domestic currency, the yuan, which has been under prolonged depreciation pressure. The Chinese government has been selling U.S. Treasurys to support the yuan’s value. # Global U.S. Treasury Holdings Increase Despite China’s Decline Even with China's reduction, global holdings of U.S. Treasurys grew. By the end of March, total foreign holdings of U.S. government debt rose to $9.0501 trillion, an increase of $233.1 billion from $8.8170 trillion in February. This growth indicates stronger demand for U.S. Treasurys from other nations, despite portfolio adjustments by China and some other holders. China’s decreasing Treasury holdings underscore the ongoing recalibration in global capital markets amid geopolitical tensions, trade uncertainties, and evolving currency dynamics. This trend may signal shifts in Beijing’s approach to managing its foreign reserves in the coming years.