&imwidth=800&imheight=600&format=webp&quality=medium "China urges banks to cut exposure to US debt amid treasury market volatility")
Chinese regulators have urged their financial institutions to start reducing their US debt and treasuries due to growing volatility and concentration risks in the US markets. This move comes after a phone call between US President Donald Trump and Chinese President Xi Jinping last week. Trump hailed the phone call as “excellent”,he is scheduled to visit China in April.
According to a report by Bloomberg, the People’s Bank of China and the National Financial Regulatory are verbally encouraging Chinese banks to pare down exposure to US debt and treasuries. However, the move was framed as a diversification or risk aversion instead of geopolitical reasons.
The report, however, lacked specifics about the time and deadline of such activity. Over the past week western media have been reporting an excerpt of an old speech by the Chinese President Xi Jinping, where he outlined his ambitions to turn renminbi into a global reserve currency. The speech was published by the flagship ideology journal of China’s Communist Party, Qiushi. It mentions that “a strong currency widely used in international trade and foreign exchange,” with a “powerful central bank” will attract global investments and influence global pricing.
US President Donald Trump has engaged in a bitter trade war with China, which is starting to hurt the US economy now. Following the phone call with Xi, Trump was loud about the relationship between the two countries, which is “an extremely good one, and we both realise how important it is to keep it that way.” However, the response from the Chinese side was more muted. The Chinese state media reported that China is ready “work with the US to steer the giant ship of China-US relations steadily forward through winds and storms, and accomplish more big things and good things.”
China has lowered its US Treasury holdings to $682.6 billion in November 2025, according to the data released by the US Treasury Department. In the Asian afternoon trading US Treasuries, yields to maturity are edging higher by two-three basis points. There is a growing market sentiment that US-government debt no longer possesses the safe-haven appeal.
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