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China’s Treasury holdings may not be shrinking at all, just changing address, and the clue is a $600 billion pile with Canada’s name on it.
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According to the report, DoubleLine’s Vitaliy Liberman noticed that Canada’s stockpile of US debt securities had grown aggressively to nearly $600 billion of Treasuries and bonds, despite a tit-for-tat tariff war between the two countries. Liberman was told that the increase was in fact due to China, which has been moving US securities to custodian banks outside the United States.
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China’s reported ownership of US Treasuries has fallen. Some investors and analysts believe that decline reflects China shifting its holdings to accounts in other countries, rather than actually reducing them, in order to give the appearance of decoupling from the United States. [The claims are unconfirmed.]
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The question matters because China has historically been one of the biggest foreign buyers of US government debt. A genuine Chinese retreat would remove an important source of demand for Treasuries at a time of heavy US borrowing, while hidden holdings would suggest that demand is more stable than the headline numbers imply. The appearance of decoupling would also carry political weight amid trade tensions.
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As an addition, official numbers by the U.S. Treasury show that largest foreign holders of U.S. treasury securities are Japan and UK, holding 1.1 and 1.0 trillion dollars, respectively. China is the third-largest holder (618 billion dollars) as of July 2026.
Canada is among the largest holders, too, counting for 426 billion dollars as per July this years. According to the linked report, this number has now increase to roughly 600 billion dollars, despite a ‘tariff war’ between Canada and the U.S.
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I can’t tell if this is important or not. I don’t even have the vocabulary to articulate what I don’t understand. The summary here and the “If you’re new here” at the bottom of the article are not helping. No doubt there’s a key concept around buying debt at the scale of a country’s economy is eluding me.
Anyone care to explain?
It doesn’t matter to us. China has a piece of paper in Canada that the US owes them money. (Not a literal piece of paper)
I’ll try to ELI5 here.
Suppose you need to borrow money, with a clear promise to pay back in the form of IOUs, and of course, there’ll be interest paid on top.
As someone lending you money, I am essentially making an investment. However, there are other people that want to know that I am not putting too much money into this investment, especially cause the money I have is pooled from these people, and because, for example, they may not like you, and so they don’t want their money to help you.
But I know that you’re most likely going to pay back with good interest on top, so it’ll be worth the money. So I’m just going to get some group of individuals, spread across different countries, one of them living in Canada, where I lend them the money, they promise to purchase your IOUs, and eventually, when you pay back, I get all the payments (and these individuals get a small slice).
Thus, on paper, I’ve sent my money to many countries, and that’s what these other people who I got money from are seeing. But in reality, they’re all buying your IOUs and I still effectively control them.
That explains the setup. Now to explain why this holding matters.
There’s a thing I can do about these IOUs, in that they can be sold to someone else who’s willing to buy them, whenever I need to. If I sell a lot of them away at a single time, I could sell them for cheap (without hurting my returns of course).
Now, you’re still trying to gather more money and thus selling more IOUs. But if I’m selling your existing ones, people are only gonna buy mine if your new IOUs don’t give the same amount of interest or more. If I sell your IOUs for slightly cheaper, they effectively give back more money, so the effective return is higher. So you have to match the promised interest that would outcompete that return, in order to be able to borrow more money. But it also means you have to pay back more later on.
If that made sense to you, then you’ve just understood the current situation of the records high US Treasury Yield, and why people are getting worried.
Now, why is my hiding of my actual holdings of your IOU a problem? Because it means you don’t know how much I’m going to try to sell at a single time, which I can leverage to drive the yield rate even higher.
Now, why is this potentially an issue for Canada? The current US administration is shown itself to be very happy to hop on any bandwagon where they can blame Canada for its problems to try and justify its actions against Canada, especially in, you guessed it, making Canada the “51st State”. I don’t doubt that the US gov can trace the ownership of these “IOUs” back to China, but we aren’t dealing with an administration that is sensible – their agenda is the point and everything else, even truth and logic, is secondary.
the “If you’re new here” at the bottom
I am not sure whether I understand this. I just wanted to provide additional context by adding these numbers. One underlying thing here is that China’s official rhetoric differs greatly from what they actually appear to do.
China does decouple from the US in many ways (technology, military, and trade) but not from its debt purchasing and it’s not a new or secret thing (though this article has a lot of speculation). Not once has China dumped US debt as a retaliatory measure, or even threatened to do so, because that would negatively effect the value of those holdings.
The current majority of China’s purchases of US debt is through Belgium at an amount of ~460 billion which far exceeds Belgium’s economy. None of this purchased debt is attributed to Belgium’s (or Canada’s) holdings and doesn’t reflect on the middle state.
What this could in fact mean is that China is 1) trusting that Canada is expanding it’s economy and willing to put money in it’s investment market (not just in Belgium) and therefore strengthening Canada’s economic standing by extension 2) just looking to diversify where it has holdings, or just easier to make jurisdictional trades, 3) is warming up to more trade with Canada and willing to park money in the country to increase partnership.
But of course this is Scotty posting, a notorious Sinophobe, who wouldn’t understand what any of what their posts even mean. Just sees “China + action” and equates it with bad.
China does … not decouple from its debt purchasing
This is wrong. In February 2026, Chinese regulators have advised financial institutions to curb holdings of U.S. Treasuries due to concern over concentration risk and market volatility …
Officials urged banks to limit purchases of U.S. government bonds and instructed those with high exposure to pare down positions, though the advisory does not apply to state holdings, Bloomberg reported.
Just a few weeks ago, on 17 September, the South China Morning Post - a propaganda media outlet based in Hong Kong under the Chinese Communist Party’s censorship regime - reported that China cuts US Treasury holdings to 18-year low amid global bond sell-off. The SCMP says China has "“ersistent concerns over sustainability of Washington’s finances” and that China “see[s] overall foreign holdings [of U.S. debt] shrink for second consecutive month.”
There never was any evidence for China’s sell-off, but China’s rhetoric haven been pointing into that direction for a long time now.
But of course this is Scotty posting, a notorious Sinophobe, who wouldn’t understand what any of what their posts even mean. Just sees “China + action” and equates it with bad.
I don’t even mind your insults, but you should at least try to not spread fake news.
Haha look, it’s easy to do a quick Google search about “times that China sold US debt”, but you’re still proving my point because you’re out of your depth and don’t understand what you’re sharing.
From your own quote (with my emphasis):
Officials [from the National Financial Regulatory Administration which is a national advisory body to protect consumers] urged banks (private banks) to limit purchases of U.S. government bonds and instructed those (private individuals) with high exposure to pare down positions, though the advisory does not apply to state holdings (so not Chinese Government holdings), Bloomberg reported.
Yes, anyone can buy bonds. Private enterprises, individuals, governments. You’ve lumped them all in together because “China”, while the article you’ve posted talks about the Chinese government (that’s pretty racist if you didn’t know).
Here is a Canadian financial institution providing a similar advisory about US bonds trustworthiness. This is something that is happening globally btw - Denmark pensions, amongst others in EU, sold their US bonds (and these are actual government entities).
https://www.cibc.com/en/gam/insights/markets-and-economy/us-canadian-bond-markets.html
Then you use, by your own admission, a propaganda outlet that mentions the following:
China cut its holdings of US Treasuries to an 18-year low in July, as overall holdings by foreign countries fell for a second consecutive month amid deepening worries over the sustainability of American government debt.
Now a few things here
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you’re contradicting yourself. The article you originally posted says that quite the opposite is happening in relation to what China says (that China is actually buying bonds, but with a different address), but now you’re referencing a “propaganda outlet” that China has been selling bonds. So what is it?
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let’s go with if China is selling the bonds - yes, selling bonds off slowly over several years (maintaining bond prices) is a very big difference to dumping (making prices plummet). So not sure what you’re trying to disprove with sharing that.
Here is my original premise for reference:
Not once has China dumped US debt as a retaliatory measure, or even threatened to do so, because that would negatively effect the value of those holdings.
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