Official U.S. figures put China’s holdings of Treasury securities, or U.S. government debt, at $591 billion in August. That was down from $700 billion a year earlier and marked the lowest level in 18 years. China once held more of this debt than any other country.
However, the figures may not reflect everything China owns. The U.S. Treasury Department mainly collects information from financial firms based in the United States. When securities are kept in overseas accounts, the records may not identify their actual owners. Meanwhile, reported Treasury holdings in Canada and Belgium have risen sharply, raising questions about whether some belong to China.
Brad Setser, a former Treasury official who now holds a senior fellowship at the Council on Foreign Relations, believes China uses overseas banks to hold some assets. He estimates that U.S. financial assets still account for 50% to 55% of China’s reserves. Although China has reduced its long-term Treasury holdings and increased short-term debt holdings, the official decline may overstate how far it has moved away from U.S. assets.
