China’s officially recorded holdings of US Treasuries fell to $591 billion — Fortune
China’s officially recorded holdings of US government bonds amounted to $591 billion in August. This is the lowest figure in 18 years and less than $700 billion a year earlier. In April 2022, China still held $1 trillion in US Treasury securities, Fortune reports.
Accounting through foreign custodians
The US Treasury Department notes that the data are collected primarily by US custodians and broker-dealers. US securities held in accounts with foreign custodians may be attributed to those custodians rather than to their actual owners.
Against this backdrop, holdings of US government bonds attributed to Canada rose to $465 billion in August from $169 billion in the same month five years earlier. In Belgium, the figure increased from $228 billion to $490.5 billion over that period. The publication notes that these changes coincide with a reduction in China’s officially recorded portfolio.
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Brad Setser’s estimates
Brad Setser, a senior fellow at the Council on Foreign Relations and former US Treasury official, wrote on X that the evidence of China using a Canadian custodian for part of its securities issued by US federal housing agencies is particularly compelling. He also noted that, since around 2020, holdings of US government bonds at custodians in the United Kingdom, France, Luxembourg, and Belgium have increased substantially.
According to Setser’s analysis, accounting for Canada and European custodial centers may produce an estimate of up to $500 billion. Under a narrower calculation covering Canada, Luxembourg, and France since 2022, the figure is about $300 billion. He also noted that China reduced its holdings of long-term government bonds and increased its holdings of short-term bills.
Setser estimated China’s total US financial assets at 50–55% of its reserve portfolio. In his view, securities that China may hold through custodians in Canada and Europe should be taken into account for a more accurate estimate.
