China cuts $6.8b in US Treasuries in August, hitting a record low since May 2017

China cuts $6.8b in US Treasuries in August, hitting a record low since May 2017

China has cut nearly $90 billion of its US Treasury holdings since June 2018.

China decreased its holdings of US Treasury securities by $6.8 billion in August to $1.104 trillion, hitting a record low since May 2017. It remains the second-largest creditor of the US after Japan, according to data released by the US Department of the Treasury on Wednesday.

China has cut nearly $90 billion of its US Treasury holdings since June 2018. Germany currently holds a total of $86.5 billion in US Treasury.

According to a statement from the US Department of the Treasury, the US saw $70.5 billion net inflow of international capital in August, including a net inflow of $121.5 billion from foreign private capital and a net outflow of $51 billion from foreign official capital.

"One of the reasons China has decreased holdings of US Treasury securities is to diversify its reserved assets," Liu Xuezhi, a senior economist at the Bank of Communications, told the Global Times on Thursday morning.

The continuous opening-up of China's economy and the marketization of the yuan's exchange rate both demand a more diversified asset reserve, which is necessary to reduce related risks, Liu noted.

China's gold reserves have increased for 10 consecutive months and were recorded at 62.46 million ounces (1,948.4 tons) by the end of September, an increase of 190,000 ounces from August, media reports said, citing data from the China Gold Association.

Japan remains the largest holder of US Treasury securities, its holdings reaching $1.175 trillion in August. It has topped the list since June.

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