China Cuts US Treasury Holdings to 14-Year Low Amid Rising FX Reserves

China, the United States' third-largest creditor, reduced its holdings of US Treasury securities in July to the lowest level since 2009, according to the latest data.

The country trimmed its US Treasury holdings by USD 25.7 billion from the previous month, bringing the total to USD 730.7 billion. This marks China's fourth reduction in 2025.

China's Treasury holdings have remained below USD 1 trillion since April 2022 and generally show a declining trend. In March, China cut its holdings by USD 18.9 billion, allowing the United Kingdom to overtake it as the second-largest US creditor.

Japan retained its position as the largest US creditor in July, increasing its holdings by USD 3.8 billion to USD 1.15 trillion. The United Kingdom, still the second-largest creditor, also raised its holdings by USD 41.3 billion to USD 899.3 billion.

According to the US Treasury Department, foreign investors saw a net inflow of USD 2.1 billion into long- and short-term US securities in July. Private investors contributed USD 22.6 billion, offset by USD 20.5 billion in outflows from official institutions.

Despite reducing its US debt, China's foreign exchange reserves continued to rise, increasing by USD 29.9 billion in August to USD 3.32 trillion—the highest level since January 2016—according to the State Administration of Foreign Exchange.