China has directed some of its state-owned banks to reduce their holdings of U.S. Treasury securities, in a move that underscores rising financial tensions between Beijing and Washington and reflects Beijing’s ongoing efforts to reshape its foreign reserve strategy.
Officials told state banks that they should begin scaling back holdings of U.S. government debt, shifting capital into other assets and currencies as part of a broader diversification strategy.
The directive comes amid concerns that heavy reliance on U.S. Treasuries exposes China to geopolitical risks and limits Beijing’s financial flexibility amid global economic uncertainty.
China is one of the world’s largest foreign holders of U.S. government debt, historically using Treasuries to support export-driven growth and maintain stability in its foreign exchange reserves.
Reducing those holdings could signal a shift toward greater use of alternative reserve assets, including gold and other sovereign debt.
Analysts said the move may also reflect China’s desire to strengthen financial autonomy as tensions with the United States persist over trade, technology competition and influence in global markets. Cutting Treasury holdings could have implications for global interest rates and U.S. government financing, although economists noted that China’s decisions alone are unlikely to destabilize global financial markets.
Beijing has not officially commented on specific targets or timelines for the reduction, and it remained unclear how extensive the cuts would be or which banks would participate. However, the guidance marks a notable recalibration of China’s approach to managing its foreign reserve portfolio.
