⚠️CHART OF THE WEEK: China's official holdings of US Treasuries dropped to the lowest in 16 years

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The value of Treasuries held by China has fallen $27 billion over the last 2 months, to $757 billion in April, the lowest since Q1 2009. China’s holdings have been falling for over a decade now.

However, China is likely owning $300-$700 billion through Belgium and Luxembourg, often considered a proxy for Chinese custodial accounts.

Full data below and under the link:

Overall, foreign Treasury holdings fell $36 billion in April, to $9.01 trillion, the second-highest on record.

The decline was driven by net sales from foreign private investors, while official entities were net buyers of longer-term Treasuries, according to Treasury Department data.

Japan, the largest foreign holder, increased its holdings by $4 billion to $1.13 trillion, the highest since March 2024.

The UK’s holdings rose $28 billion, to $808 billion, the highest on record (see the first chart above).

It seems like China continues to officially diversify from the US Dollar into gold but secretly wants to hold some more Treasuries for additional legal, political and operational protection.

Additionally, using offshore custodians allows faster trading and reallocation across different assets or markets without the need to repatriate funds directly to China.

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