China's Strategic Shift from US Treasuries to Bitcoin and Gold: Geopolitical Diversification and the Rise of Uncorrelated Safe-Haven Assets

China’s economic and geopolitical strategy in 2025 is undergoing a profound transformation. For over a decade, the country has been methodically reducing its reliance on US dollar-denominated assets, particularly US Treasuries, while simultaneously accelerating the internationalization of the renminbi (RMB) and exploring alternative safe-haven assets like Bitcoin and gold. This shift is not merely a response to trade tensions or currency depreciation risks but a calculated move to diversify systemic exposure in a world increasingly defined by multipolar power dynamics and financial fragmentation.

The Decline of US Treasuries and the RMB’s Global Ambitions

China’s holdings of US Treasury securities, which peaked at $784.3 billion in February 2025, fell to $765.4 billion by March 2025, reflecting a broader trend of gradual divestment [3]. While this decline is modest in the short term, it aligns with a decade-long strategy to reduce dependence on the US dollar. According to a report by Reuters, foreign holdings of US Treasuries have declined by 12% since 2020, with China’s role in this trend underscoring its pivot toward a multipolar currency system [3].

This strategy is underpinned by the RMB’s growing internationalization. By January 2025, yuan-based cross-border transactions accounted for 55% of outbound payments and 50% of inbound payments, a testament to China’s success in embedding the RMB in global trade [4]. The expansion of the Cross-Border Interbank Payment System (CIPS) and the development of a digital RMB (e-CNY) are critical components of this effort. The e-CNY, which facilitated over $34 billion in transactions by mid-2025, is designed to bypass Western-dominated SWIFT infrastructure and create a parallel financial ecosystem [5].

Bitcoin and Gold: The New Frontiers of Geopolitical Diversification

As China reduces its exposure to US Treasuries, it is increasingly turning to Bitcoin and gold as tools for geopolitical and economic risk mitigation. The 2025 geopolitical landscape—marked by trade wars, sanctions, and currency volatility—has amplified demand for uncorrelated assets that can hedge against systemic shocks.

Bitcoin, in particular, has gained traction among Chinese investors. A survey by Bitwise Investments reveals that 26% of ETF investors in Greater China plan to allocate capital to cryptocurrency ETFs in 2025, driven by concerns over yuan devaluation and capital controls [2]. While Bitcoin’s role as a safe-haven asset remains debated, its limited supply and censorship-resistant properties make it an attractive hedge in a fragmented global economy. During the Israel-Iran escalation in early 2025, Bitcoin rose 0.42%, outperforming traditional assets like the S&P 500, which dipped 1.2% [3].

However, Bitcoin’s volatility complicates its adoption. During the Russia-Ukraine war, Bitcoin plummeted 43.3% over six months, contrasting sharply with gold’s 8.98% gain over the same period [3]. This duality—Bitcoin’s potential as a digital safe-haven versus its susceptibility to extreme swings—has led many Chinese institutions to adopt a balanced approach. The People’s Bank of China, for instance, has increased gold purchases to $3.3 trillion in foreign exchange reserves, reinforcing its status as a cornerstone of China’s diversification strategy [5].

The Strategic Logic of a Multipolar Financial System

China’s shift away from US Treasuries is not a rejection of the dollar but a pragmatic effort to build resilience. By promoting the RMB, Bitcoin, and gold, China is fragmenting the dollar’s hegemony without directly challenging its dominance. This strategy is supported by initiatives like the Belt and Road Initiative (BRI) and BRICS+ cooperation, which facilitate RMB settlements in regional trade and infrastructure projects [5].

The rise of uncorrelated assets also reflects a broader rethinking of global capital allocation. Traditional safe-haven assets like the US dollar and Swiss franc remain relevant, but their effectiveness is increasingly context-dependent. For example, the US Dollar Index (DXY) fluctuated during the 2025 Israel-Iran crisis, influenced more by monetary policy than geopolitical events [3]. In contrast, Bitcoin and gold offered asymmetric protection, albeit with varying degrees of reliability.

Conclusion: A New Era of Geopolitical Finance

China’s strategic shift from US Treasuries to Bitcoin and gold underscores a fundamental reordering of global financial priorities. As geopolitical tensions and economic uncertainties intensify, the demand for uncorrelated safe-haven assets will only grow. While the RMB’s internationalization and Bitcoin’s speculative appeal are still works in progress, their combined role in diversifying China’s financial exposure is undeniable. For investors, this transition presents both risks and opportunities—a world where traditional paradigms are being rewritten by the forces of multipolarity and technological innovation.

Source:
[1] China Holdings of US Treasury Securities [https://www.ceicdata.com/en/china/holdings-of-us-treasury-securities/holdings-of-us-treasury-securities]
[2] Greater China 2025 ETF Investor Survey [https://www.bbh.com/us/en/insights/investor-services-insights/greater-china-2025-etf-investor-survey.html]
[3] Foreign holdings of US Treasuries top $9 trillion in March, ... [https://www.reuters.com/markets/us/foreign-holdings-us-treasuries-top-9-trillion-march-data-shows-2025-05-16/]
[4] China's Growing Shift Away from the Dollar [https://www.fxcintel.com/research/analysis/china-cross-border-transactions-jan-25]
[5] China's FX Reserves Hit $3.3 Trillion as Gold Holdings Grow [https://discoveryalert.com.au/news/chinas-foreign-exchange-reserves-2025-growth-drivers/]