The decline in Chinese yuan bonds in the U.S. is not as big as it seems, down just 5% since 2013, Business Insider reports, according to research firm Ned Davis Research.
“Although US debt levels in China have fallen, they are much less than believed.”
Note that the reduction in Chinese investments in US Treasury bonds began back in 2013. At that time, China held $1.3 trillion in long-term US Treasuries.
In August of this year, 10 years later, this volume amounted to $793.5 billion, that is, there was a decrease of 40% under the influence of rising bond yields and falling bond prices.
When measured in yuan debt, this is not such a significant figure, since the yuan itself has depreciated by about 20% against the US dollar over 10 years, and the decline in the volume of yuan treasury bonds has been approximately 27%.
The rate at which China is reducing its holdings of long-term US Treasuries is about $1.8 billion per month, but Beijing is buying about $4.6 billion per month of agency mortgage-backed securities that are guaranteed by the US government.
Experts believe that in this way China wanted to get a higher-yielding alternative to treasury bonds with minimal additional credit risk.
China is also believed to have holdings of US bonds in foreign accounts abroad, most likely in Belgium and Luxembourg.
