Official US figures put China’s holdings of Treasury securities, or US government debt, at $591 billion in August. That was down from $700 billion a year earlier and marked an 18-year low. China once held more of this debt than any other country.
However, the figures may not reveal the full picture. They mainly come from financial firms based in the US. When assets are kept with banks abroad, the figures may link them to the country where they are held rather than their real owner. China may therefore hold additional US debt through banks in Canada and Europe. Over five years, recorded holdings in Canada rose from $169 billion to $465 billion, while Belgium’s increased from $228 billion to $490.5 billion.
Brad Setser, a former US Treasury official, believes US financial assets still represent 50–55% of China’s reserves, the assets it keeps in reserve. He says China appears to use several overseas banks to conceal its holdings. This makes it harder to judge how far China has moved away from US assets.
