Photo shows US dollar banknotes in Washington, DC, the United States. Photo:Xinhua
China reduced its holdings of US Treasury bonds to $757 billion in April, according to data released by the US Treasury Department on Wednesday.
China, which in March slipped to become the third-largest foreign holder, behind the UK, had $757 billion of US Treasury securities in April, down $8.2 billion from March.
This latest move represents the second 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 $3.7 billion in April to $1.13 trillion. The UK’s holdings climbed by $28.4 billion to $807.7 billion.
Overall foreign holdings of US government debt totaled $9.01 trillion in April, the second-highest figure on record and down just $36 billion from March, US Treasury Department data showed on Wednesday.
China’s gradual reduction in US Treasury holdings aligns with a broader trend of diversification in its foreign exchange reserves. Increasing the proportion of gold holdings is one manifestation of promoting such diversification, a Chinese expert said.
“China’s April reduction in US Treasury holdings is mainly due to the need for diversified foreign exchange reserve allocation,” Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Thursday.
He noted that China had a relatively high proportion of US dollar-denominated assets compared with non-dollar currencies like the euro. To optimize the foreign exchange reserve portfolio and balance different currency-denominated assets, China has been gradually reducing its dollar assets, mitigating risks from over-concentration and strengthening the reserve structure.
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.
In 2022, China divested $173.2 billion worth of US Treasury debt. In 2023, China divested $50.8 billion worth of US Treasury bonds. In 2024, China divested $57.3 billion worth of US Treasury securities, according to paper.cn.
Data released by the State Administration of Foreign Exchange (SAFE) showed that as of the end of May, China’s foreign exchange reserves reached $3.2853 trillion, an increase of $3.6 billion from the end of April, up 0.11 percent.
China continued to expand its gold reserves for the seventh consecutive month, adding 60,000 ounces in May to bring its total holdings to 73.83 million ounces.
Guan Tao, global chief economist at BOC International under the Bank of China, noted that with unilateralism and protectionism on the rise and the multilateral trade system facing headwinds, the shift toward a multipolar monetary system is speeding up. This reinforces gold’s dual function as a hedge and a critical safeguard for global settlements.
Officials from the SAFE said that China’s economy continues to recover and improve, with steady progress in high-quality development, providing a solid foundation for the stability of its foreign exchange reserves.
Global Times