BEIJING: China has reduced its US Treasury holdings to a 17-year low as part of the continued diversification of its forex reserves towards gold and overseas equity investments amid unsettling ties with Washington.
China's holdings of US treasuries fell to USD 682.6 billion in November last year, down from USD 688.7 billion in October, the lowest since 2008, according to data released by the US Department of the Treasury on Thursday.
Beijing’s move to trim its US holdings came as the foreign ownership of the US debt hit a record high, with Japan and the UK scaling up their holdings, according to the data.
Japan’s holdings rose by USD 2.6 billion to USD 1.2 trillion, while the UK’s pool rose by USD 10.6 billion to USD 888.5 billion.
China holds the world’s largest forex reserves totalling USD 3.3579 trillion at the end of December 2025, according to the official media reports here.
Observers say the reduction of US holdings by China is part of its continued efforts to adjust its strategic reserve allocations towards other assets, such as gold, non-US currencies and overseas equity investments.
"The decrease in China's holdings of the US treasuries is a result of increased optimisation and diversification of holdings of foreign assets seen in recent years, which helps strengthen the overall safety and stability of the portfolio," Xi Junyang, a professor at the Shanghai University of Finance and Economics, told state-run Global Times.
Shao Yu, chief economist with the Sci-tech Innovation Management Research Centre at Fudan University, said Beijing appeared set to keep reducing its stockpile amid the growing risk of US debt unsustainability.
“The massive accumulation of debt resembles a Ponzi scheme, where larger volumes of new debt are used to replace the old. China doesn’t want to play this game anymore,” he told the Hong Kong-based South China Morning Post.
While slashing its US debt holdings, China is diversifying its forex assets more to increase its gold reserves.
The latest data from the People's Bank of China(PBC), the country's central bank, showed that China's gold reserves stood at 74.15 million ounces by the end of December 2025, an increase of 30,000 ounces compared with the previous month, marking the 14th consecutive month that the central bank has increased its gold reserves.
The PBC will likely continue to increase its gold reserves in the future, as it is conducive to enhancing the stability of reserve assets and strengthening the ability to withstand external risks, while the proportion of gold in China's reserve assets remains relatively low compared to other major global economies, Xi Junyang said.