China keeps trimming its holdings of U.S. Treasuries

China keeps trimming its holdings of U.S. Treasuries​

Treasury Department data show China continuing to lower its reported holdings of U.S. government debt. In the latest reporting month - June 2026 - China's holdings stood at $633.4 billion, down from $659.3 billion in May. That is well below the historical peak of roughly $1.317 trillion reached in November 2013.

The number matters not in isolation but for what it represents. This is not about China "leaving" U.S. debt - it is a long, gradual rebalancing that has become part of a steady multi-year trend.

Fig. 1. Reported Chinese holdings of U.S. Treasury securities, TIC data (U.S. Treasury), billions of U.S. dollars. The solid line is monthly data from September 2014 to January 2023; the 2013 peak and the latest 2026 level are marked separately. Source: U.S. Treasury, TIC (Major Foreign Holders).

What the data actually show​

Over the long run the picture is clear: the decline is not a one-off collapse but a stretched-out process. From a peak near $1.32 trillion in 2013, holdings came down steadily - to about $1.246 trillion at end-2015, roughly $1.07 trillion at end-2019, about $859 billion at the start of 2023, and $633.4 billion by June 2026.

• Peak - about $1.317 trillion (November 2013);
• End-2019 - about $1.07 trillion;
• Start of 2023 - about $859 billion;
• June 2026 - $633.4 billion (May 2026 - $659.3 billion).

The current level is below half the peak and, by the reported data, roughly the lowest since 2009. So the "lowest in a quarter century" framing would be imprecise: this is more like a decade and a half. Just as important - this is not a dump but a gradual decline with occasional pauses.

ℹ INFO A key caveat: the TIC figures are reported holdings along the U.S. Treasury line, gathered from U.S.-based custodians and broker-dealers. They do not capture every security ultimately owned by Chinese entities, especially those held in offshore custodial accounts.

Why China is reducing its Treasury exposure​

The data show a result, not a cause. So it is more accurate to talk about a combination of factors that could have pushed toward a gradual reduction.

• Reserve diversification - less reliance on a single currency and issuer;
• A growing share of gold and other reserve assets in China's reserves;
• Geopolitical and trade tension between Washington and Beijing;
• Considerations about dollar exposure and the risk of asset freezes;
• Domestic financial conditions and the need for liquidity;
• The path of Treasury yields and the appeal of alternatives.

These reasons are not mutually exclusive, and the data are consistent with gradual rather than abrupt rebalancing. Claiming a specific trigger, such as one event, without solid evidence would be overreach.

Does this mean China is "dumping" Treasuries​

No. Judging by the data, this does not look like a disorderly sell-off.

The month-to-month changes are small, and the decline has unfolded over years with pullbacks. A panic liquidation would show sharp, concentrated sales that visibly weighed on prices. Instead we see a steady reduction, which looks more like deliberate reserve management and long-term diversification.

It is also worth remembering that even after the drop China remains among the largest foreign holders of U.S. debt, behind Japan, which traditionally holds the biggest position.

Why a falling headline number does not mean China stopped buying​

This is the nuance that is often missed.

The reported line for "China, Mainland" mainly reflects securities held in the United States and in U.S. broker-dealer networks. Holdings sitting in offshore custodial accounts or routed through other jurisdictions may not fall into this line. So part of the decline may reflect not sales but a shift of paper into a different accounting system.

Analysts have noted the same thing: reports have pointed to Chinese banks and other institutional buyers increasing purchases of U.S. Treasuries even as China's headline reported figure fell. In other words, "China" as a reporting category and total Chinese exposure are not the same thing. Some of the buying simply is not visible in the official "China" line.

ℹ INFO Bottom line: a falling official figure does not mean that every Chinese institution is simultaneously abandoning U.S. Treasuries.

What it means for yields and the dollar​

Here it is important not to overstate the impact. A single holder trimming positions rarely moves yields or the dollar on its own - the Treasury market is huge and driven by many participants.

• Possible mechanism for yields: weaker demand from a large holder could over time nudge prices down and yields up, but the effect is spread out and is not the main driver;
• Possible mechanism for the dollar: if some reserves shift out of dollar assets into other currencies or gold, this could be a minor factor favoring a softer dollar, but again not the dominant one;
• The key point - many countervailing forces are at work: other foreign buyers, domestic flows, Fed policy, inflation and risk appetite.

Claiming that China's sales "caused" a specific move in yields or the currency, without direct evidence, would be wrong. This is part of the broader context rather than a decisive cause.

What to watch next​

To gauge where the trend is heading, a few things are worth following.

• Monthly TIC data on China and the overall structure of foreign holders;
• China's share among foreign holders and how it compares with Japan and other major players;
• The path of gold and other reserve assets within China's reserves;
• The direction of 10-year Treasury yields and the appetite of external investors;
• Any signal about what is driving the reported number - sales or a reclassification into another jurisdiction.

Conclusion​

In short, China's reported U.S. Treasury holdings are indeed at roughly a decade-and-a-half low - $633.4 billion by June 2026 versus a peak near $1.32 trillion in 2013. But this is the result of a long, gradual diversification rather than a panicked dump. Crucially, the reported "China" line does not capture all Chinese exposure: some buying and some paper sits in other jurisdictions and is invisible in this figure. For the market this looks more like a background factor reshaping long-run demand than a trigger for a sharp move in yields or the dollar.