China Reverses Course, Accumulates $170 Billion in US Treasuries
China has abruptly shifted its stance on US dollar-denominated Treasuries, purchasing $170 billion over the past two months after years of divestment. December saw $100 billion in acquisitions, followed by $70 billion in January—a stark reversal from the relentless offloading observed since 2022.
The capital flows through state-owned financial institutions rather than the People’s Bank of China’s reserves, reflecting how the country’s trade surplus is managed. These entities now hold approximately $1.65 trillion in disclosed foreign assets, including Treasuries, though Beijing’s motives for the sudden pivot remain unclear.
The scale of buying could Ripple through global markets, given China’s historical influence as a major Treasury holder. The move contrasts with President Xi Jinping’s decade-long campaign to reduce USD dependency, raising questions about strategic financial recalibration.
