China has advised domestic banks to curb their exposure to US Treasuries amid concerns over market volatility, as the country’s holdings fall to their lowest level in 18 years, according to a Bloomberg report citing sources.
Regulators have urged financial institutions to limit new purchases of US Treasuries and asked banks with sizable positions to gradually reduce holdings. The guidance applies only to banks’ investment portfolios and does not affect bonds held by the Chinese government. No specific sales targets or timetable were set.
The instructions, delivered to major banks in recent weeks, reflect Beijing’s view that heavy exposure to US Treasuries could leave institutions vulnerable to market swings. Sources said the move is intended to diversify financial risk rather than signal geopolitical intent or a loss of confidence in the United States.
The caution comes as global investors increasingly debate whether US Treasuries and the dollar remain reliable safe havens. Following the report, US Treasury prices fell, pushing yields higher. The 10-year yield rose 0.04 percentage point to 4.25%, while the 30-year yield increased 0.03 percentage point to 4.88%. The Bloomberg Dollar Spot Index slipped 0.2%.
The report said the guidance was issued before a recent phone call between US President Donald Trump and Chinese President Xi Jinping, with the two leaders expected to meet at a Beijing summit in April. US-China relations, while strained, have appeared more stable since last year’s trade-truce talks.
Chinese banks are estimated to hold about US$298 billion in dollar-denominated assets, though the portion invested in US Treasuries is unclear. China’s central bank has not commented.