China sells record number of US bonds in Q1 of this year
Date
5/21/2024 7:47:57 AM
(MENAFN) The latest data from the US Treasury Department indicates that China has sold a record amount of US bonds in the first quarter of this year, signaling a shift in its investment strategy away from dollar assets.
During the initial three months of the year, Beijing divested a total of USD53.3 billion in Treasuries and agency bonds, while simultaneously increasing its purchases of commodities like gold, according to the data.
Analysts speculate that China's decision to reduce its holdings of US dollar-denominated assets could be part of a broader effort to diversify its investment portfolio, particularly amid escalating geopolitical tensions with the US.
Some observers have also linked China's move to the economic repercussions of Western sanctions imposed on Russia in the aftermath of the Ukraine conflict, suggesting that Beijing aims to mitigate potential risks associated with similar sanctions.
“The handling of Russian reserves by the US and other G7 countries, including threats of expropriations and sanctions, likely prompted China to reduce its exposure to US Treasury assets to avoid being similarly targeted,” Craig Shapiro, a macroeconomic adviser at LaDuc Trading, commented on the seizure of Russian assets during an interview with a news agency on Saturday.
Since the onset of the Ukraine conflict, the West has frozen approximately USD300 billion in Russian sovereign funds.
Euroclear, headquartered in Brussels and recognized as a custodian of China’s holdings, reportedly divested USD22 billion in US Treasuries during the specified period, as per a news agency’s reports.
This move by China, the second-largest foreign holder of US Treasury securities after Japan, has raised concerns among some economists. They suggest that China's sell-off could potentially disrupt the Treasury market and lead to an increase in US borrowing costs.
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