China has instructed state-owned banks to reduce exposure to U.S. Treasuries, extending a long-running decline in its holdings of American government debt. Bloomberg reported that China’s Treasury portfolio has fallen to roughly a 17-year low, a sign of how the country is adjusting reserve management as geopolitical and market risks rise.
Its holdings are now reported in the mid-$600 billion range, down sharply from levels above $1.3 trillion more than a decade ago. The move is aimed at commercial banks rather than an abrupt liquidation of official reserves managed by the People’s Bank of China. That distinction matters. The message is about lowering concentration in U.S. sovereign debt, not dumping reserves in one step.
Reserve diversification stays on the same path
The directive fits China’s broader shift away from dollar-denominated assets. In recent years, the country has added to gold allocations, expanded the use of the yuan in cross-border trade, and cut reliance on U.S. financial instruments. This latest instruction keeps that pattern intact at a time when bond-market volatility and long-term U.S. fiscal concerns remain in focus.
The immediate effect on global bond markets appears limited. China is no longer the largest foreign holder of Treasuries, and any near-term reduction looks measured rather than aggressive. Even so, the move adds to a wider trend of weaker foreign participation in U.S. government debt, leaving the market more dependent on domestic buyers.
Bitcoin gets a macro narrative boost, not a clear flow signal
For Bitcoin and the broader crypto market, the development strengthens an existing macro theme instead of acting as a near-term trigger. China’s lower exposure to Treasuries fits with de-dollarization arguments, and within that framework Bitcoin is often described as a non-sovereign asset operating outside traditional monetary structures.
Actual China-linked allocation into Bitcoin remains small, especially through Hong Kong. Data from SoSoValue shows that Bitcoin holdings linked to Hong Kong investors carry a total net asset value of about $273 million. That is far below the scale seen in the U.S. market, where adoption has accelerated and holdings have grown into the billions, highlighting the gap between macro framing and real capital deployment.
Stablecoins still absorb Treasury demand
Any discussion about capital rotating away from Treasuries also has to account for stablecoins. Dollar-backed stablecoins generally hold Treasuries and cash equivalents as reserves to maintain a 1:1 peg to the U.S. dollar, which means growth in circulation can translate directly into stronger demand for short-term government debt.
Tether and Circle together hold more than $180 billion in U.S. Treasuries, placing them among the largest non-sovereign holders of that debt. The report also notes projections that stablecoin reserve portfolios could expand toward $1.6 trillion over time as demand rises across trading, payments, and DeFi.
China’s role in that trend is less straightforward. The country has participated in the mBridge project, which includes a digital yuan-linked settlement system that has processed about $55 billion in transactions. At the same time, Chinese authorities have tightened restrictions on stablecoin-related activity, arguing that fiat-pegged stablecoins can replicate the functions of sovereign currencies outside official monetary control. That concern has become part of the basis for renewed limits on mBridge-linked stablecoin activity.