Photo shows US dollar banknotes in Washington, DC, the United States. Photo:Xinhua
China reduced its holdings of US Treasury bonds by $900 million to reach $756.3 billion in May, according to data released by the US Treasury Department on Thursday.
This latest move represents the third consecutive month of reductions by China in 2025. Following this reduction, China maintained its position as the third-largest foreign holder of US Treasury debt.
Japan, the biggest foreign holder of US Treasury bonds, saw its holdings tick up by $500 million in May to around $1.13 trillion. The UK’s holdings climbed by $1.7 billion to $809.4 billion.
The fluctuation in China’s US Treasury holdings in May is normal as some bond maturity will lead to a reduction in China’s holdings, but overall, China’s holdings of the US debt remain stable so far in 2025, Zhao Qingming, a Beijing-based veteran financial expert, told the Global Times on Friday.
However, since April 2022, China’s holdings of US Treasury securities have remained below $1 trillion and have generally shown a downward trend, according to domestic news outlet paper.cn.
Amid volatility in international financial market, China has been diversifying its foreign exchange reserve allocation in recent years by increasing holdings of other assets like gold in a bid to coordinate the safety and development of foreign exchange reserves, mitigate risks from over-concentration, and support the country’s high-quality development, Zhao said.
China’s foreign exchange reserves totaled around $3.32 trillion at the end of June 2025, up by $32.2 billion, or 0.98 percent, compared to the end of May, according to data released by the State Administration of Foreign Exchange (SAFE) recently.
Meanwhile, China’s central bank continued to increase its gold holdings for the eighth consecutive month in June.
In June, the US dollar index declined while global financial asset prices generally increased due to factors such as macroeconomic policies in major economies and prospects for global economic growth, the SAFE said.
China’s economy has continued to grow steadily, maintaining a strong development momentum that supports the overall stability of the country’s foreign exchange reserves, it said.