How have China’s Treasury holdings changed since 2018 and what drove those changes?
Executive summary
China’s holdings of U.S. Treasury securities have fallen substantially since 2018, sliding from roughly the trillion-dollar range into the $680–$730 billion area by late 2025 according to U.S. Treasury and secondary data [1] [2]. That decline reflects a mix of portfolio diversification, macroeconomic shocks since the pandemic, and political risk concerns rather than a single, openly declared strategy [3] [4] [5].
1. The numbers: a marked downshift from post‑2013 highs to 2025 lows
China’s holdings peaked at about $1.316 trillion in November 2013 and remained over $1 trillion through much of the 2010s, but they dipped below $1 trillion in mid‑2022 and fell to roughly $688.7 billion in October 2025 and $682.6 billion in November 2025 in U.S. Treasury-based series reported by CEIC and U.S. Treasury aggregates [1] [2] [3]. Multiple outlets characterize the October–November 2025 figures as the lowest since 2008, a more than 45% decline from the 2013 peak [6] [7] [5].
2. What drove the decline: pragmatic reserve management and diversification
Chinese authorities and many analysts frame the change as portfolio optimization — diversifying a $3+ trillion foreign‑exchange reserve pool into gold, non‑U.S. currencies and overseas equities to reduce concentration risk in dollar assets [3] [8]. Reporting notes persistent increases in China’s gold reserves alongside cuts in Treasuries through 2025 and cites officials and academics who describe the moves as “optimisation” to improve safety and stability of reserves [3] [9].
3. Political risk, “weaponization” fears, and market signalling
A parallel driver is strategic caution: concerns about U.S. fiscal stability, perceived political interference in Fed independence, and the wider U.S.–China strategic rivalry have been explicitly cited in coverage as reasons Beijing would shrink dollar‑backed exposures [7] [5]. Commentators also warn that China is unlikely to undertake a sudden, disorderly liquidation because such action would damage China’s remaining foreign assets and invite retaliation — a check against overt “weaponization” of Treasuries [4] [10].
4. The pandemic, trade shifts and currency considerations
The decline accelerated during and after the COVID‑19 shock as capital flows, export patterns, and FX management needs changed; analysts observe that China’s PBoC reduced U.S. Treasury holdings steadily since the pandemic as part of broader balance‑sheet adjustments [10]. At the same time, rising trade with Europe and a shift toward euro and other currencies in some reserve components are cited as partial reallocations away from dollar‑denominated Treasuries [5].
5. Scholarly nuance and contradictory evidence: strategy versus economics
Academic analysis complicates easy strategic narratives: a 2025 study finds that, while China’s holdings sparked debate about “weaponizing” reserves, temporal trends since 2018 show a low measured impact of changes in bilateral relations on Treasury holdings, suggesting economics and reserve management matter more than overt geopolitics [11]. This contrasts with journalistic accounts that emphasize geopolitical distrust and the optics of de‑dollarization [7] [6], highlighting an interpretive divide between empirical econometrics and policy commentary.
6. Data caveats and accountability limits
Any assessment must account for data limitations: TIC/Treasury aggregates are compiled from custodial holdings that may not perfectly map to ultimate beneficial owners, so headline national allocations are estimates rather than precise ledgers [1]. Reporting from Chinese state outlets and academics may emphasize diversification narratives for domestic and diplomatic audiences, while Western outlets stress security and geopolitical readings, meaning assessments carry implicit agendas on both sides [3] [7].