On June 18th local time, the latest data released by the U.S. Treasury showed that China continued to reduce its holdings of U.S. government bonds in April, reducing its holding size to its lowest level in nearly 18 years.
On June 19th, the Hong Kong-based South China Morning Post reported that as global geopolitical risks increase and concerns about the independence of the Federal Reserve grow, China is continuing to diversify its foreign exchange reserves. At the same time, China is further increasing its gold reserves in order to cope with geopolitical and financial risks.
The latest international capital flow report released by the U.S. Treasury shows that the amount of U.S. government bonds held by Chinese investors has decreased from $652.3 billion in March to $651.1 billion in April. According to statistics from financial data service provider Wind, this is the lowest level since September 2008.
China's trend of reducing its holdings of US debt has persisted for many years. Since Trump's first presidential term, China's overall holdings of US debt have shown a slow but non-linear decline. In March last year, China was surpassed by the UK, becoming the third-largest holder of US government debt overseas, following Japan and the UK.
Overall, the total foreign holding of U.S. bonds in April reached 9.353 trillion US dollars, which is higher than the level in March but lower than the historical record of 9.49 trillion US dollars set in February.
Among them, Japan, which currently holds the largest amount of US debt, has increased its holdings from $1.19 trillion in March to $1.21 trillion. The UK, the second-largest holder of US debt, has seen its holdings rise from $926.9 billion to $937.5 billion.
In contrast, Canada reduced its holdings by more than $42 billion in April, reducing its position to $397.1 billion; Ireland, which ranks ninth, also reduced its holdings from $355.2 billion to $345.3 billion.
U.S. Department of Treasury
The Nanyang Post analysis indicates that the reduction of US debt by countries including China reflects concerns about global economic stagnation, given the rising political and economic uncertainties worldwide. In April, the military conflict between the United States and Israel with Iran entered a fragile phase, with ceasefire agreements being broken and negotiations reaching a deadlock, casting a shadow over the prospects for a long-term solution.
Meanwhile, the issue of the Federal Reserve's independence has also attracted market attention. In that month, Kevin Warsh was nominated as the chairman of the Federal Reserve. During the hearing on April 21, he stated that he would 'never' become a ' puppet' of the U.S. President. However, investors remain concerned that political factors could affect the future interest rate decisions of the U.S. central bank.
On the 17th of this month, Vosh presided over the first monetary policy meeting since taking office. As expected by the market, the Federal Reserve kept interest rates unchanged. However, analysts believe that the policy statement conveyed a more hawkish stance against inflation than market expectations.
The newspaper also noted that while China has been reducing its holdings of US bonds, it has been increasing its gold reserves in recent years. Data on China’s official reserve assets released by the People’s Bank of China on the 7th showed that as of the end of May, China’s gold reserves had increased for the 19th consecutive month, reaching a total of 74.96 million ounces. This represented an increase of 320,000 ounces compared to 74.64 million ounces at the end of April.
Gold is considered an important safe-haven asset in the face of geopolitical and financial risks. Data from the World Gold Council shows that despite the high price of gold, the amount of gold purchased by central banks around the world in 2025 remains high. Last year, global central banks purchased a total of 863 tons of gold. Poland was the largest purchaser, with an acquisition of about 100 tons. Emerging economies such as Kazakhstan, Brazil, and Turkey followed closely behind.
According to a report released by the European Central Bank in early June, as of the end of 2025, the proportion of U.S. government bonds in the total amount of global official reserves has been declining for two consecutive years, dropping by 4 percentage points compared to the end of 2023. Meanwhile, the proportion of gold reserves increased by 11 percentage points during the same period.
At the end of last year, gold accounted for 27% of the total assets of global official reserves, surpassing U.S. government bonds as the largest asset in global official reserves.
Analysts believe that under the dual pressures of the Federal Reserve's continued expectation of interest rate cuts in 2026, which will lead to further decline in real interest rates, and the ongoing global geopolitical risks, the trend of central banks buying gold will not reverse in the short term. As gold assumes an increasingly important role as a global reserve asset, the international monetary system is also accelerating its transition away from the “unipolar era” dominated by US dollar assets, towards a “plural reserve system” supported by both gold and multiple currencies.
