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China Cuts US Treasury Holdings Amid Trade Tensions

7/19/2025

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China Cuts Treasury Holdings

In May, China slashed its US Treasury holdings to $756.3 billion, marking the lowest level since March 2009, as trade tensions with the US escalate. Following a brief 90-day truce in their trade war, economists are calling for urgent pro-market reforms to address deepening economic imbalances and fierce competition challenges.

Right

Asia Diversifies Currency Holdings

Asian economies are pulling back on US Treasury holdings amid growing fears over dollar-denominated assets. With the US facing a downgraded credit rating and soaring national debt, countries in Asia are stepping up regional financial collaboration, advocating for local currencies, and innovating digital currencies to facilitate cross-border transactions.

History

Historical Context

The 2008 global financial crisis led to a surge in US Treasury purchases by foreign nations, with China holding $1.1 trillion in US debt by 2009. As of 2023, China has reduced its holdings to $756.3 billion amid rising trade tensions, prompting Asian economies to reconsider their reliance on the dollar, potentially reshaping global economic dynamics towards regional financial independence.

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China Cuts Treasury Holdings

In May, China slashed its US Treasury holdings to $756.3 billion, marking the lowest level since March 2009, as trade tensions with the US escalate. Following a brief 90-day truce in their trade war, economists are calling for urgent pro-market reforms to address deepening economic imbalances and fierce competition challenges.

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