China cuts US Treasury holdings for 3rd month

By BLOOMBERG

WASHINGTON • China’s holdings of US Treasuries fell for a third consecutive month in August as the Asian nation struggles to prevent the yuan from weakening amid trade tensions with America.

China’s ownership of US bonds, bills and notes was US$1.17 trillion (RM4.86 trillion), down from US$1.17 trillion in July, according to data released by the Treasury Department on Tuesday.

Japan, which is the largest foreign owner of Treasuries after China, decreased its holdings to US$1.03 trillion from US$1.036 trillion a month earlier.

Saudi Arabia boosted its ownership by US$2.7 billion to a record US$169.5 billion. Beijing’s sale of Treasuries is sometimes viewed as a response to the trade war, especially after China’s ambassador to the US signalled in March his country could scale back purchases of the debt to retaliate against American tariffs. US President Donald Trump since July has imposed tariffs on about half of Chinese imports, with Beijing responding with duties of its own on American goods.

“Holdings have declined over the past three months and may continue to do so as the ongoing trade war sours the relationship between China and the US, and thus reduces their appetite for Treasuries,” Thomas Simons, an economist at Jefferies LLC, wrote in a note. “This will be important to keep an eye on going forward.”

Overall foreign holdings of US Treasuries rose US$35.4 billion to US$6.29 trillion in August, with Brazil and Ireland also increasing their ownership.