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China dumps nearly $50 billion in US Treasuries in Q1

China dumps nearly $50 billion in US Treasuries in Q1
Ana Zirojevic

As the trade war between the two of the world’s largest economies – China and the United States – continues, the East Asian nation has offloaded billions in U.S. treasuries and agency bonds, with the divestment figure already reaching $50 billion in the first quarter of 2024.

Specifically, China got rid of $48.9 billion of its US treasuries and agency bonds in Q1 2024, cutting its holdings from $816.3 billion in December 2023 to $767.4 billion in March 2024, according to the US Treasury Department data retrieved by Finbold on June 3.

Indeed, China has been steadily reducing its supply of US treasuries and agency bonds this year, which in January 2024 amounted to $797.7 billion, and in February 2024, it dropped to the figure of $775 billion, and a similar trend is also noticeable in the activities of Hong Kong.

Major foreign holders of U.S. Treasury securities. Source: U.S. Treasury Department
Major foreign holders of US Treasury securities. Source: U.S. Treasury Department

As a reminder, the country had dumped more than $20 billion in US Treasuries and agency bonds in late 2023, adding up to the record-breaking first quarter of 2024 and bringing the total amount to over $70 billion in just seven months, according to combined data on the matter.

Retaliation to American policies?

Notably, the actions of China, traditionally a major holder of US debt, looks to be a retaliation to President Joe Biden increasing the tariffs on Chinese electric vehicles (EVs) up to 100% and semiconductor parts up to 50%, in sentiment echoing that of former U.S. President Donald Trump.

At the same time, China seems to be reinvesting its US dollars in other assets in its ongoing ‘de-dollarization’ strategy, and it has increased its gold supply to the highest-ever amount of 2,264 tonnes, with the yellow metal making up 4.9% of its official reserves in April, according to the World Gold Council data.

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