China Cuts US Treasury Holdings

China cut its US treasury holdings by $16.7 billion to $1.1682 trillion in January—its lowest level since July 2017. According to statistics from the US Department of Treasury, although it remains the largest foreign holder of US treasuries, China has decreased its investment three times in the past six months, China News Service reported. China’s State Administration of Foreign Exchange announced in January that the country manages and invests its forex reserves following the principals of diversification and separation, in order to safeguard value and profit. However, it also echoed earlier media speculation that China would consider decreasing its US treasuries holdings amid escalating China-US trade tensions. The White House announced on Wednesday that it had asked Beijing to close the $100 billion trade gap between the two countries. According to the US government, the country’s trade deficit with China reached $375 billion last year, which accounted for nearly 70% of the total trade deficit Washington faced globally. The price of US treasury bonds has sharply dropped since January.