China Continues to Reduce Holdings of US Treasury Bonds, Reaching New Lows

China, the second-largest creditor of the United States, decreased its US Treasury bond holdings for the fourth consecutive month in October, reaching the lowest levels since February 2009.

According to data released by the US Department of the Treasury, China's holdings of US Treasuries dropped by $11.9 billion to $760.1 billion in October compared to the previous month. The country has maintained holdings below $1 trillion in US Treasury bonds since April 2022.

China began trimming its US Treasuries holdings in January, February, and March, with a slight increase in April followed by further reductions in May. In June, China increased its possession of US Treasury bonds, only to decrease them again in July.

Japan, the largest creditor of the US, reduced its holdings by $20.6 billion to $1.103 trillion. Additionally, the United Kingdom, the third-largest creditor, cut its holdings by $18.4 billion to $746 billion.

In October, the net foreign inflow into short- and long-term US securities and bank flows amounted to $203.6 billion. This included approximately $220 billion in inflows of official funds and $16.4 billion in outflows of foreign private funds, as indicated by data from the US Department of the Treasury.