China has recently sold approximately $50 billion in US Treasury securities, reducing its holdings to the lowest level in 14 years. This move is part of China’s approach to decrease its dependence on US financial instruments amidst ongoing geopolitical tensions with the United States. As of March 2024, China’s holdings have dropped to $767 billion, down from $816 billion in December 2023.
China’s actions reflect a broader trend of “dedollarization,” where the country aims to reduce the dominance of the US dollar in international trade and money management. This strategic shift has significant implications for global financial markets, particularly in the context of rising US debt charge rates and the increasing yield spreads between different types of US debt instruments.
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