China’s holdings of US government bonds in January fell to its lowest level since May 2009 due to the US Federal Reserve’s tight monetary policy and the escalating tensions between the countries, local media reported on Thursday.
China held $859.4 billion of US Treasury securities in January, down for the sixth month in a row, according to data released by the US Department of the Treasury on Wednesday.
January’s figure was down from $867.1 billion in the previous month and from $1 trillion in January 2022.
The decrease in investments in treasuries is backing Beijing’s efforts to diversify its portfolio, reduce dependence on the greenback while promoting the broader international use of the Chinese yuan and guarding against the risk of sanctions, according to the daily South China Morning Post.
Last year, the Fed raised interest rates by a total of 425 points in seven rate hikes to fight record inflation, which jumped to a 40-year high in mid-2022.
On Feb. 1, it raised its benchmark interest rate by 25 basis points — less than December’s hike of 50 basis points.