Singapore's Lianhe Zaobao reported today: "China reduced its holdings of U.S. Treasury bonds in March, allowing the UK to surpass it as the second-largest creditor nation to the United States."

Data released by the U.S. Treasury on Friday (May 16) showed that Japan, the UK, Canada, and other countries increased their holdings of U.S. Treasury bonds in March. Among them, the UK's holding scale rose to 779.3 billion USD, exceeding China's 765.4 billion USD.

The data shows that China net-sold 27.6 billion USD worth of long-term U.S. Treasury bonds in that month.

Prior to 2019, China had always been the largest overseas holder of U.S. Treasury bonds until it was replaced by Japan that year. This time, the UK surpassed China for the first time in over 20 years, leaping to become the second-largest overseas holder of U.S. Treasury bonds.

A few comments: In recent years, the U.S. economy has faced continuous troubles. The federal debt total reached 36.2 trillion USD by April 2025, accounting for 123% of GDP, far exceeding the internationally recognized warning line of 60%. Debt dependence relies on "borrowing new to repay old," with rapidly increasing interest expenditure pressure. At the policy level, frequent mistakes have occurred. The Trump administration implemented a combination of policies including "reciprocal tariffs + fiscal tightening + tax cuts," leading to rising inflation expectations and greater risks of economic stagnation. Under these circumstances, the risk of the U.S. Treasury credit system has intensified, and China reducing its holdings of U.S. Treasury bonds is a wise move to avoid risks associated with dollar assets.

Reducing holdings of U.S. Treasury bonds is a key step in China's construction of a new reserve system. In 2024, the central bank's gold reserves increased by 182 tons, and the transaction volume of the Cross-Border Interbank Payment System (CIPS) exceeded 120 trillion yuan, indicating that China is actively building a new reserve system consisting of "gold + domestic currency + diversified assets."

Globally, selling U.S. Treasury bonds has become a trend. In the third quarter of 2024, the proportion of U.S. dollar reserves fell to 57.4% (the lowest in 30 years), and various countries are turning to gold, the renminbi, and emerging currencies. China reducing its holdings of U.S. Treasury bonds aligns with the global trend of "de-dollarization" and will have a profound impact on the global financial landscape.

Original source: https://www.toutiao.com/article/1832344244850775/

Disclaimer: This article solely represents the author's personal views.