China held $1.15 trillion in US Treasuries as of the end of September, a decline of around $13.7 billion compared to the previous month, according to data released by the US government.
While the fall brings holdings to their lowest level since mid-2017, China nonetheless remains the largest holder of US Treasuries, followed by Japan with $1.028 trillion.
China and Japan jointly account for over a third of US sovereign debt held by foreign creditors, which stood at $6.2239 trillion as of the end of September.
State-owned media has made haste to deny speculation that the sale of US sovereign bonds is a form of retaliation against the Trump administration’s tariff measures, pointing instead to efforts to prop up a waning yuan.
“In recent months, the depreciation pressure on the yuan has been fairly strong, which has forced the government to intervene and support the currency,” said Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, to Global Times on Sunday.
“In order to do that, the government has to sell some US bonds in exchange for US dollars, and then sell those dollars to buy yuan.”