Official data shows China cutting U.S. Treasury holdings to $591 billion, but analysts suspect it masks true holdings by stashing bonds with non-U.S. custodians, notably in Canada and Europe.
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01Summary
- 01China's U.S. Treasury holdings fell to $591 billion in August, the lowest in 18 years, down from $700 billion a year earlier.
- 02Canada's Treasury holdings jumped to $465 billion in August from $169 billion five years ago, and Belgium's rose to $490.5 billion from $228 billion.
- 03China's trade surplus reached $938 billion in the first nine months of 2026, expected to surpass last year's record $1.2 trillion.
- 04Analyst Brad Setser estimates China's total U.S. financial holdings remain 50% to 55% of its reserve portfolio, with bonds held via custodians in Canada, the UK, France, and Luxembourg.
- 05U.S. sanctions on Russia and Donald Trump's trade war have given Beijing additional reasons to diversify away from dollar reserves.
02Why it matters
The story matters because hidden Chinese bond holdings affect global bond markets and perceptions of de-dollarization, while massive trade surpluses must be reinvested, influencing currency and interest rate dynamics.
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