China continues to adjust its financial strategies in response to changing relations with the US. The recent sale of US Treasury bonds by the Chinese government raises questions about the future of economic interaction.
China's Stance on US Treasury Bonds
In March 2025, China sold nearly $19 billion in US Treasury bonds, reducing its portfolio from $784.3 billion to $765.4 billion. This significant reduction occurs amid growing distrust and a tariff war with the United States. Despite a temporary suspension of certain tariffs for 90 days by the US administration, confidence remains in question.
Strategy of Reduction and Diversification
This decision is not merely a repositioning. For many analysts, it aims to protect against an unpredictable US economy. According to Yu Yongding, a former advisor to the People's Bank of China, "China must develop a series of countermeasures through repetitive scenarios. It must protect the security of its overseas assets." It is also notable that in March, Moody's downgraded the US sovereign debt rating from 'AAA' to 'Aa1', signaling challenges in the US's fiscal sustainability.
Global Economy Under Pressure
The decline in Chinese holdings of US debt serves as an indicator of the international economic situation. This process does not imply a complete break with US markets, but rather a methodical adjustment of China's positions. Some analysts view this as an alarming signal regarding how much the US can depend on the goodwill of its creditors.
China's reduction in US Treasury holdings raises important questions about the future of economic relations between the world's largest economies. These changes may herald more radical steps amid increasing geopolitical tensions.
