China shifts US bond holdings offshore, potentially beyond the reach of any future currency sanctions, report says




Dollar vs. Yuan
Dollar vs. Yuan  
  • China cut US debt holdings by 9% from the end of 2021 to July this year, according to Nikkei Asia.

  • Meanwhile, the Cayman Islands saw a $38.5 billion rise in China's Treasury holdings, and Bermuda saw a $7 billion increase.

  • China may be protecting dollar-denominated assets from any future sanctions like the kind that froze Russia's foreign currencies.

China has steadily trimmed its holdings of US government debt this year and moved some bonds to offshore tax havens where they could be protected from any future sanctions, according to a report from Nikkei Asia.

Treasury Department data last week showed that Beijing's holdings of US Treasury bonds hit $970 billion in July. While that's up from $967.8 billion in June, which was the lowest since May 2010, the overall trend has been heading lower. For the year to date through July, China's stash of Treasurys shows a 9% decline.

Meanwhile, China's Treasury holdings located in the Cayman Islands and Bermuda jumped by $38.5 billion and $7 billion, respectively.

Shifting them offshore could protect China's dollar-denominated assets from the potential of future sanctions, like the kind that froze Russia's foreign currency reserves, Nikkei said.

After Russia invaded Ukraine early this year, more than $300 billion in Russian assets that were held in sanctioning countries were frozen.

A Chinese government source told Nikkei that the freeze of Russia's assets "dealt a much bigger blow" than kicking Moscow out of the SWIFT global payments system. And any attempt to reunify Taiwan with mainland China by force could trigger similar sanctions that would put Beijing's $3 trillion in foreign-currency reserves at risk.

And while its Treasury holdings drift lower, China's gold imports more than doubled in August year over year to $10.36 billion, according to Nikkei.

COMMENTS

More Related News

Google discontinues Google Translate in mainland China
Google discontinues Google Translate in mainland China
  • US
  • 2022-10-03 11:07:57Z

Google has discontinued its Google Translate services in mainland China, removing one of the company's few remaining services that it had provided in a...

What to Watch as Commodities Face Another Wild Quarter
What to Watch as Commodities Face Another Wild Quarter's Trading

(Bloomberg) -- Commodities face a daunting array of challenges in the final stretch of a turbulent year after capping their first back-to-back quarterly loss...

China Giant Edges Out Goldman as World
China Giant Edges Out Goldman as World's Top Share Sale Arranger

(Bloomberg) -- A surge in China's initial public offerings propelled Citic Securities Co. to the top spot in the global league tables for equity issues...

China Tightens Lending Taps, Leaving African Markets Vulnerable
China Tightens Lending Taps, Leaving African Markets Vulnerable

(Bloomberg) -- Most Read from BloombergGazprom Halts Gas Supplies to Italy in Latest Energy BattleGet Ready for Another Bear-Market Rally, Strategist Emanuel...

U.S. defense secretary sees no imminent invasion of Taiwan by China
U.S. defense secretary sees no imminent invasion of Taiwan by China

WASHINGTON (Reuters) -U.S. Defense Secretary Lloyd Austin said on Sunday he sees no imminent invasion of Taiwan by China but said China was trying to...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy