China's US Treasury holdings hit 14-year low
China's holdings of US government bonds have declined for the sixth straight month to $859.4 billion in January.
Analysts explained the reduction, a 14-year low, has resulted from the Federal Reserve's sizable interest rate hikes and the escalating tensions between the countries, reports South China Morning Post.
China's holding of the US government bonds now stands at the lowest point since May 2010 when it held $843.7 billion.
Despite the fall, China remains the second-largest non-US holder of the Treasuries after Japan which has $1.104 trillion as of the end of January.
Slashing investments in US Treasuries, which is an important component of China's over $3 trillion foreign reserves, is a result of Chinese financial institutions' flexible actions for optimized asset allocation and diversification of investment portfolio amid higher dollar interest rates and volatile international environment, reports the South China Morning Post quoting analysts.
The value of US Treasuries started to fall since the US Federal Reserve started to hike interest rates from March 2022, while the asset value of other developed economies such as the EU and Japan are relatively higher due to lower interest rates, the Global Times quoted Zhao Qingming, a Beijing-based veteran financial expert, as saying.
After a series of seven aggressive interest rate hikes to tame inflation in 2022, the Fed raised the federal funds rate by 0.25 percent in February.