Treasury Holdings by China Is More an Economic Decision Than Political

The Treasury Department building in Washington on Jan. 19, 2023, following an announcement by the U.S. Treasury that it had begun taking measures Thursday to prevent a default on government debt, as Congress heads towards a high-stakes clash between Democrats and Republicans over raising the borrowing limit. Saul Loeb/AFP via Getty Images

Commentary

One of the recent news warnings about the status of the U.S. dollar was the continuing slash of U.S. Treasury securities holdings by mainland China. It’s latest holding in January was US$859.4 billion, a year-over-year drop of 17 percent compared with that of US$1,033.8 billion in January 2022. Seventeen percent is undoubtedly a significant decline compared to the overall total of 3.3 percent fall. Yet there are reasons justifying this: China exports fell by ten percent at the end of end-2022, with foreign sell-off of China sovereign bonds and other outflows, that 17 percent was explainable.