China is no longer the second-largest holder of U.S. Treasuries, according to the U.S. Department of the Treasury’s “Major Foreign Holders of Treasury Securities” table released on Friday.
According to the report, China currently holds $759 billion in U.S. debt, while the United Kingdom has risen to second place with $780 billion in holdings.
This marks the first time since October 2000 that China and the U.K. have swapped these positions. However, the global economic landscape has changed dramatically since then. In 2000, China represented just 3.3% of global GDP, compared to 19.6% today. Meanwhile, the U.K.’s share has dropped from 3.3% to 2%.
China’s holdings peaked in 2013 at over $1.3 trillion, and the gradual reduction since then signals a long-term trend. A major factor in the continued decline has been China’s push to diversify its reserves, increasing investments in gold and emerging assets like cryptocurrency.
This trend appears to be accelerating amid rising tensions between Beijing and Washington. These tensions recently culminated in a full-scale trade war, accompanied by rhetoric from Trump Administration officials indicating a strategic effort to undermine China’s economic position.
In the final quarter of 2024, China sold over $51 billion in U.S. bonds ahead of President Donald Trump’s return to office in January.
China has also stepped up efforts to conduct trade in local currencies with partners like Russia, aligning with broader global moves toward de-dollarization. Some analysts warn that if this trend continues, the U.S. dollar’s status as the world’s reserve currency could eventually be threatened.
President Trump has repeatedly emphasized his commitment to preserving the dollar’s dominance. In November, prior to his inauguration, he threatened to impose 100% tariffs on BRICS countries if they attempted to form a competing reserve currency.
In February, Trump declared “BRICS is dead,” claiming he had thwarted efforts by the bloc to establish a new reserve currency. Despite this claim, the upcoming BRICS summit in Rio de Janeiro will reportedly include discussions on alternative payment systems and further steps toward reducing dependence on the dollar.