In a significant realignment of the global financial order, China has reduced its holdings of U.S. Treasury securities to their lowest level since the 2008 financial crisis. According to the latest U.S. Treasury International Capital (TIC) data released in January 2026, Beijing’s stockpile fell to $682.6 billion in November 2025.
This marks a nearly $84 billion drop year-over-year and signifies a broader strategic retreat; China’s share of all foreign-held U.S. debt has plummeted to just 7.3%, down from a peak of nearly 29% in 2011.
The Great Diversification: Why China is Selling
The reduction is not merely a tactical financial move but a cornerstone of China’s long-term “de-dollarization” strategy. Analysts point to three primary drivers:
- Geopolitical De-risking: Following the 2022 freezing of Russia’s $300 billion in reserves, Beijing is increasingly wary of the “weaponization” of the dollar. Trimming Treasury holdings reduces China’s vulnerability to potential U.S. sanctions over trade, technology, or Taiwan.
- Gold as the New “Safe Haven”: As China sells bonds, it is aggressively buying bullion. The People’s Bank of China (PBOC) reported its 15th consecutive month of gold purchases in January 2026, with total reserves hitting a record 2,308 tonnes.
- Domestic Banking Directives: On February 9, 2026, Chinese regulators reportedly issued fresh guidance to domestic commercial banks to limit new purchases and pare down existing exposure to U.S. government debt to manage “concentration risk” amid high market volatility.
Global Market Impact: Who is Buying?
While China is retreating, the U.S. Treasury market remains the world’s largest and most liquid, currently valued at over $30 trillion. The slack left by China is being picked up by other traditional allies and domestic investors.
| Country/Entity | Current Holdings (Nov 2025) | Recent Trend |
| Japan | $1.20 Trillion | Increasing (Primary foreign holder) |
| United Kingdom | $888.5 Billion | Increasing (Secondary foreign holder) |
| China | $682.6 Billion | Decreasing (17-year low) |
| Total Foreign Ownership | $9.4 Trillion | Record High (despite China selling) |
Risks and Resilience
Despite the headlines, market experts note that the global impact has been relatively contained.
- Yield Stability: U.S. Treasury yields have remained largely stable because other foreign buyers (Japan, UK, Belgium) and high domestic demand have offset China’s exit.
- The “Exit” Limit: Economists argue it is difficult for China to completely disconnect. With over $3.35 trillion in total foreign exchange reserves, there are few other markets (Europe or Japan) deep enough to absorb China’s massive capital surplus.
- Retaliation Risks: An aggressive “dumping” of Treasuries could backfire on Beijing. A massive sell-off would weaken the U.S. dollar, making Chinese exports more expensive and devaluing China’s remaining trillion-dollar dollar-denominated assets.
“The decrease in China’s holdings is a result of increased optimization and diversification… helping strengthen the overall safety and stability of the portfolio.” — Xi Junyang, Professor at Shanghai University of Finance and Economics
