{"text":[[{"start":11.26,"text":"China’s holdings of US Treasuries have fallen to the lowest since August 2008, underlining a shift in Beijing’s management of its reserves and a deepening rift between the world’s two largest economies."}],[{"start":24.1,"text":"The value of US government debt held by Chinese investors, as recorded by US banks and custodians, fell to $618bn in July, according to data released by the US Treasury. At its peak in November 2013, China held more than $1.3tn in US sovereign debt."}],[{"start":44.52,"text":"The 18-year low in official Chinese holdings underscores a widening divergence between the two countries, which are grappling with starkly different economic pressures. The US is running huge fiscal deficits in the face of higher inflation, while China is battling slowing economic growth and deflationary pressures as it registers record trade surpluses."}],[{"start":65.88,"text":"In the past, such surpluses were in large part rolled into US Treasuries."}],[{"start":70.92,"text":"China’s falling US Treasury holdings were part of “a global trend of diversification into gold . . . and agency bonds, as well as other assets like equities, especially with the AI boom,” said Wei Li, head of multi-asset investments for BNP Paribas Securities in China."}],[{"start":87.88,"text":"Analysts believe China also holds a growing proportion of its US assets through third-party custodians including Euroclear in Belgium and Clearstream in Luxembourg, which obscures the true level of its holdings."}],[{"start":99.88,"text":"But the official Treasury data released on Wednesday nonetheless points to China’s gradual reduction of its official holdings as it diversifies into assets including gold and US agency bonds, which are mortgage-backed securities guaranteed by the American government."}],[{"start":null,"text":"
"}],[{"start":114.88,"text":"China’s divestment accelerated after the US froze Russia’s overseas reserves in the wake of Moscow’s full-scale invasion of Ukraine in 2022, as Beijing feared the possibility of facing similar measures in the future."}],[{"start":128.92,"text":"Some of the fall in the value of China’s holdings could also reflect market moves. The FT reported this week that foreign investors were now buying more US equities than government bonds, a sign of the lure of the AI-supercharged stock market and a possible signal of concern for the “risk-free” status of Treasuries."}],[{"start":147.96,"text":"International flows into US stocks reached 2.8 per cent of US GDP on average in the year to June, overtaking Treasuries at 2 per cent for the first time this century, apart from brief episodes in the Covid-19 pandemic and the aftermath of the global financial crisis, according to analysis by Deutsche Bank."}],[{"start":null,"text":""}],[{"start":167.08,"text":"“China’s move is mostly showing the US they can dump Treasuries,” said Alicia García Herrero, chief economist for Asia-Pacific at investment bank Natixis. She added that global investors were becoming increasingly concerned about US debt levels, which passed $40tn last month."}],[{"start":184.08,"text":"Rising Japanese government bond yields, meanwhile, were tempting Japanese investors back to the domestic market, which could push US Treasury yields up further, she added."}],[{"start":193.84,"text":"China, which is now the third-largest holder of Treasuries behind Japan and the UK, built up its enormous pile of US debt as a result of a multi-decade trade surplus, a sore point for President Donald Trump."}],[{"start":206.08,"text":"But American officials have also expressed concern over foreign selling of Treasuries, which pushes yields up and makes debt refinancing more expensive."}],[{"start":215.2,"text":"The UK’s holdings of US Treasuries are nearing $1tn for the first time, largely thanks to holdings by private players such as hedge funds as well as other custodians. Some hedge funds hold Treasury securities and arbitrage by selling futures or swaps, positions known colloquially as “basis trades”."}],[{"start":237.88,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1789636446_3911.mp3"}