China's U.S. Treasury Holdings Decline, but Custody Data Suggests a More Complex Picture
According to the latest data from the U.S. Treasury Department, China’s holdings of U.S. Treasury securities dropped to $590.7 billion in August 2026, down from $699.7 billion one year earlier — marking an 18-year low and raising questions about de-dollarization trends. However, a former Treasury official suggests that some Chinese bonds may be held through non-U.S. custodians like Belgium or Canada, which have seen rising holdings over the same period. The data collection method relies on U.S.-based custodians, meaning foreign ownership might not always reflect actual holders due to custody arrangements in financial centers abroad. This has led experts to speculate that China may be using multiple non-U.S. custodians to obscure its true Treasury exposure, particularly for bonds issued by U.S. federal housing agencies. The global custody business is under increased scrutiny as major banks like The Bank of New York Mellon and State Street report rising assets under custody amid shifting foreign investment patterns in the U.S. debt market.
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Topics: China holdings decline custodianship data de-dollarization U.S. Treasury securities