China Sells More Bonds and Buys More Gold

China’s US Treasury Holdings Decline for Ninth Month in 2024 Amid Reserve Replacement

China’s US Treasury Holdings Decline for Ninth Month in 2024 Amid Reserve Diversification

China’s holdings of US Treasury bonds fell to $759 billion in December 2024, marking the ninth monthly decline that year, according to data released by the US Treasury Department on Tuesday. The reduction reflects a broader trend of reserve diversification by China, with increased allocation toward assets such as gold.

Key Data from December

• China’s Treasury Holdings: Fell by $9.6 billion, down from $768.6 billion in November to $759 billion.

• Japan’s Treasury Holdings: Declined by $27.3 billion, bringing its total to $1.060 trillion, though it remains the largest foreign holder of US debt.

• Foreign Holdings Overall: Dropped to $8.513 trillion from $8.633 trillion in November, retreating from the September peak of $8.679 trillion.

China’s Diversification Push

A Chinese financial analyst noted that China has accelerated diversification efforts within its foreign exchange reserves, emphasizing gold purchases as part of standard asset management operations. China’s holdings of US Treasuries have remained below the $1 trillion threshold since April 2022, reflecting a steady downward trajectory.

2024 Trend Overview

• Nine out of twelve months in 2024 saw reductions in China’s US Treasury holdings.

• Three months recorded modest increases.

• The data points to a strategic, long-term shift in China’s reserve management approach.

Foreign Exchange Reserves Update

According to SAFE (State Administration of Foreign Exchange), China’s foreign exchange reserves stood at $3.209 trillion at the end of January 2025, reflecting a $6.7 billion increase from December 2024.

The latest figures underscore China’s continued efforts to reduce exposure to US Treasuries while enhancing reserve security through alternative asset allocations.