Chinese experts whom China Daily interviewed on Oct. 19, indicated that China may continue to cut its U.S. Treasury holdings amid global worries over shrinking liquidity and the safety risks of the assets. U.S. data show that China has cut its holdings for five consecutive months, now down to $805 billion in August, just shy of the existing low in May 2009 of $801 billion.
“Part of the reason is the horrific performance of U.S. Treasury bonds in the past three years,” said Hong Hao, chief economist at GROW Investment Group. “Other reasons are related to the fact that China has become more sophisticated in foreign exchange reserve management. There is an allocation toward agency bonds with higher yields, and China has allocated more resources for the Belt and Road Initiative,” Hong said.
