China's holdings of U.S. Treasuries fell by $22.7 billion from the previous month to $775 billion in February, the second decline this year, according to data released by the U.S. Treasury on Wednesday.
As of February, China remained the second largest holder of US government debt. However, China's holdings of US debt have been below $1 trillion since April 2022.
In January 2024, China reduced its holdings of US Treasuries by $18.6 billion.
Dong Shaopeng, a senior researcher at Chongyang Financial Research Institute of Renmin University of China, said the contraction indicates a structural adjustment of China's foreign exchange reserves, which will be affected by the country's external balance and U.S. bond gains, among other factors. . Thursday's Global Times.
Dong said it is unlikely that China will dump US debt because the US dollar's function as the world's reserve currency has not changed.
However, to optimize the structure of foreign exchange reserves to ensure economic stability, China may continue to reduce its holdings of US debt in an orderly manner, Dong said.
“While the US nominal GDP growth rate looks good, some of that growth is being driven by high domestic inflation. Risks are accumulating across the US economy,” Dong said, adding that China's overseas investment He added that the general trend is to diversify. assets.
As the global trend toward de-dollarization begins, many countries are accelerating the diversification of their foreign exchange reserves by increasing their gold holdings and using local currencies for international payments.
According to data from China's central bank, the People's Bank (PBC), China's gold reserves reached 72.74 million ounces at the end of March, a monthly increase of 160,000 ounces and the 17th consecutive month of increase in gold holdings. showed that. .
According to data released by the State Administration of Foreign Exchange on April 7, China's foreign exchange reserves totaled $3.25 trillion as of the end of March, an increase of $19.8 billion (0.62%) from the previous month.
China's economy will continue to gain growth momentum, helping to keep the size of the country's foreign exchange reserves largely stable, the administration said.