China has significantly reduced its holdings of US Treasury bonds. The country's stake fell to a 17-year low in November last year. This move reflects Beijing's ongoing strategy to diversify its massive foreign exchange reserves.
Sharp Decline in US Debt Holdings
Data from the US Department of the Treasury reveals a clear downward trend. China's holdings dropped to $682.6 billion in November 2025. This figure marks a decrease from $688.7 billion in October. It represents the lowest level since 2008.
The reduction occurs even as foreign ownership of US debt reaches a record high. Other major economies are increasing their purchases. Japan boosted its holdings by $2.6 billion to $1.2 trillion. The United Kingdom raised its pool by $10.6 billion to $888.5 billion.
Strategic Shift Towards Diversification
China possesses the world's largest foreign exchange reserves. These reserves totaled $3.3579 trillion at the end of December 2025. Observers note the cut in US Treasuries is a deliberate strategic adjustment.
The country is actively reallocating its reserve assets. The focus is shifting towards other investment avenues. These include gold, non-US currencies, and overseas equity investments.
Professor Xi Junyang from the Shanghai University of Finance and Economics explains the rationale. He states the decrease results from optimized and diversified holdings of foreign assets in recent years. This approach strengthens the overall safety and stability of the investment portfolio.
Concerns Over US Debt Sustainability
Economic experts point to growing risks in the US debt market. Shao Yu, chief economist at Fudan University's research centre, highlights these concerns. He suggests Beijing is set to continue reducing its stockpile.
Shao Yu draws a stark comparison. He describes the massive accumulation of US debt as resembling a Ponzi scheme. In such a scheme, larger volumes of new debt replace the old. China, he indicates, no longer wishes to participate in this dynamic.
Concurrent Rise in Gold Reserves
While trimming US debt, China is simultaneously boosting its gold reserves. Data from the People's Bank of China confirms this parallel trend. The central bank's gold reserves stood at 74.15 million ounces by December 2025's end.
This amount reflects an increase of 30,000 ounces from the previous month. Notably, it marks the 14th consecutive month of growth in gold holdings.
Professor Xi Junyang anticipates this trend will persist. Increasing gold reserves enhances the stability of reserve assets. It also strengthens the ability to withstand external financial risks. He notes that gold's proportion in China's reserves remains relatively low compared to other major global economies. This gap suggests further room for expansion.
The broader context involves unsettled ties between Beijing and Washington. The strategic reallocation of reserves appears intertwined with these geopolitical considerations. China is methodically reshaping its financial safeguards for the future.
