China Sells $8 Billion in US Treasuries, Drops to Third Largest Holder

China has significantly reduced its holdings of US Treasuries, selling over $8 billion in April 2025. According to the latest data from the Treasury Department, China's US Treasury holdings have decreased to $757.2 billion by the end of April 2025, down from $765.4 billion in March and $784.3 billion in February. This reduction has pushed China's ranking to third place among the largest foreign holders of US Treasuries, behind the UK, which holds $807.7 billion. This shift marks the first time in over 17 years that China is not in the second position.

This move appears to be part of a broader strategic reconfiguration of China's financial reserves. Macro analyst Adam Kobeissi notes that China's reduction in US Treasury holdings has coincided with a significant increase in gold acquisitions. Since 2022, China has aggressively accumulated gold, with the share of gold in its total foreign exchange reserves rising to a record 6.8%. This trend has accelerated, with gold's share doubling since 2022, and China acquiring approximately 200 tonnes of gold during this period. The share of US Treasury holdings in China's total foreign exchange reserves has declined by about 15 percentage points since 2016, now standing at around 22%, the lowest level in at least 15 years.

The US dollar index (DXY), which measures the strength of the USD against a basket of major foreign currencies, has declined by over 15% since 2022. This decline has raised questions about the future of the US dollar as the world's primary reserve currency. Nassim Taleb, author of "Black Swan," has suggested that gold has effectively replaced the dollar as the world's reserve currency. Taleb points to the accumulation of gold in reserves and the behavior of gold over the past year as evidence of this shift. He notes that while transactions may still occur in dollars and euros, they are increasingly being converted back into gold, indicating a growing preference for gold as a reserve asset.