China trims US Treasury holdings as global ownership of US debt hits record

In February, China continued its strategy of diversifying foreign exchange reserves by trimming its holdings of US Treasury securities. The stockpile fell to $693.3 billion, a slight decrease from $694.4 billion in January, continuing a trend that has seen China's position as a US debt holder diminish to its lowest level since 2008. This move occurs even as global ownership of US Treasuries reached an all-time high of $9.49 trillion.

While the narrative of 'de-dollarization' persists, global chief economist at HSBC, Janet Henry, suggests it may be overstated. She highlighted that the US dollar's dominance in the global financial system remains largely unchallenged, evidenced by the sustained demand for US Treasuries, which are considered a benchmark for global finance due to their 'risk-free' status.

From a Chinese perspective, this strategic diversification reflects a long-term approach to managing its vast foreign reserves. While the absolute value of US Treasuries held by China has decreased significantly over the years, the recent marginal reduction aligns with a broader pattern of seeking balance in its international investments. The continued global demand for US debt, however, underscores the complexities of international finance and the enduring role of the US dollar, even as nations like China pursue greater financial autonomy.

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The US dollar is still the world’s most dominant currency. There are still buyers for US Treasuries.