China reduces US debt to 17-year low and moves reserves to gold
China has diminished its US Treasury holdings to a 17-year low, reflecting its ongoing strategy to diversify its foreign exchange reserves towards gold and international equity investments, amidst troubling relations with Washington. According to data released by the US Department of the Treasury on Thursday, China’s holdings of US treasuries decreased to $682.6 billion in November last year, a decline from $688.7 billion in October, marking the lowest level since 2008. Beijing’s decision to reduce its US holdings occurred as foreign ownership of US debt reached an unprecedented level, with Japan and the UK increasing their investments, as indicated by the data. Japan’s holdings increased by $2.6 billion, reaching a total of $1.2 trillion, whereas the UK’s pool saw a rise of $10.6 billion, bringing it to $888.5 billion.
According to official reports, China possesses the world’s largest foreign exchange reserves, amounting to $3.3579 trillion as of the end of December 2025. Observers note that the reduction of US holdings by China is part of its ongoing efforts to adjust its strategic reserve allocations towards other assets, including gold, non-US currencies, and overseas equity investments.”The decrease in China’s holdings of the US treasuries is a result of increased optimisation and diversification of holdings of foreign assets seen in recent years, which helps strengthen the overall safety and stability of the portfolio,” Xi Junyang stated.
Shao Yu stated that Beijing seems poised to continue decreasing its stockpile in light of the increasing risk of unsustainable US debt. The substantial buildup of debt mirrors a Ponzi scheme, in which increasing amounts of new debt are utilized to pay off the old. “China doesn’t want to play this game anymore,” he told. As China reduces its US debt holdings, it is strategically diversifying its foreign exchange assets to bolster its gold reserves. The latest data from the People’s Bank of China, the nation’s central bank, revealed that China’s gold reserves reached 74.15 million ounces by the end of December 2025. This reflects an increase of 30,000 ounces compared to the previous month, signifying the 14th consecutive month of growth in the central bank’s gold reserves.
The PBC is expected to keep increasing its gold reserves moving forward, as this approach supports the stability of reserve assets and bolsters the capacity to manage external risks. Meanwhile, the share of gold in China’s reserve assets is still relatively low when compared to other major global economies, according to Xi Junyang.
