China reduced its Treasury bond holdings

China continues to gradually distance itself from US debt. According to data from the US Treasury Department, the Asian giant reduced its Treasury bond holdings by $18.9 billion in March, bringing them to $765.4 billion, the lowest level since 2009.

This decline marks a strategic shift that responds to both financial and geopolitical factors , in a context of structural tensions between Washington and Beijing.

The decline in Chinese holdings contrasts with the performance of other economies. While China sold bonds, the United Kingdom , the Cayman Islands, and Canada significantly increased their positions. These three players alone accounted for $86 billion of the $133 billion in net purchases of US debt by foreign holders in March.

The UK, in particular, overtook China for the first time to become the US's second-largest foreign creditor , behind only Japan.

A long-standing and strategic trend

Although this selling has intensified recently, the Chinese decline is not an isolated phenomenon. The figures reflect a downward trend that began in 2018.

Analysts cited by Reuters and specialized media link this trend to a " risk reduction " policy undertaken by Beijing: a strategy that prioritizes the diversification of its international reserves, reducing its exposure to the US dollar in favor of gold and other currencies.

This move, interpreted as part of the de-dollarization process , seeks to reduce China 's vulnerability to unilateral U.S. financial sanctions, such as those imposed on Russia in recent years.

In parallel, China 's allies, such as the members of the Eurasian Economic Union, have also made progress in this process. Russia, for example, has achieved 93% de-dollarization of its regional trade.

Economic and commercial implications

Beyond the political reasons , according to publications on the dailyhodl.com portal, Macro investor Luke Gromen warns of the economic implications of this dynamic: If foreign creditors increase their purchases of Treasury bonds , they could have less room to buy American goods and services, worsening the trade deficit that successive administrations in Washington have tried to contain.

Gromen poses a key question: "How are they going to buy both Treasury bonds and more US goods in the future?", alluding to the incompatibility between debt financing and the sustainability of foreign trade.

A trade truce that does not change course

The recent pause in the US- China trade war , agreed upon by Donald Trump and Xi Jinping, included the temporary suspension of tariffs. However, it does not appear to have altered Beijing's financial roadmap.

In February, when the first easing measures were implemented, China surprised everyone by increasing its bond holdings by more than $20 billion. But that move was short-lived, and the March reduction indicates that the underlying objective—reducing dependence on the dollar—remains intact.

A new international financial order?

The decline in Chinese holdings comes at a time when international Treasury bond reserves reached an all-time high, surpassing $9.05 trillion. That is, although some countries like China are abandoning the dollar, global demand for US bonds remains strong—for now.

However, the pattern initiated by China could mark the beginning of a global reorganization, where financial balances are defined not only by asset profitability, but also by their strategic value.

Dedollarization is no longer a theory of the future : it is underway, although its ultimate impact will depend on the United States' response to preserving the attractiveness of its debt in an increasingly multipolar world.

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