China intensified its reduction in U.S. debt holdings to an 18-year low and increased its gold holdings to 2,400 metric tons for the 23rd consecutive month.

China further reduced its holdings of U.S. debt and increased its holdings of gold. (Bloomberg)

First published 10-17 23:44

Update time 10-18 06:45

[Compiled by Wei Guojin/Taipei Report] The South China Morning Post reported on the 17th that amid rising geopolitical tensions and doubts about Washington's fiscal outlook, China further reduced its holdings of U.S. debt to an 18-year low in August, and Japan also sold U.S. government debt. However, the United Kingdom and Canada increased their holdings of U.S. debt, partially offsetting the extent of the selling in these two Asian countries.

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Data released by the U.S. Treasury Department on the 16th showed that China’s holdings of U.S. government bonds fell to $590.7 billion in August from $618 billion in July, the lowest level since August 2008, when the holdings fell to $573.7 billion.

Japan is the largest holder of U.S. government debt. In August, Japan sold U.S. debt, reducing its debt holdings to $1.07 trillion from $1.1 trillion in July.

Data showed that foreign holdings of U.S. government debt totaled $9.33 trillion in August, up from $9.25 trillion in July. Among them, the United Kingdom, the second largest holder of U.S. debt, increased its debt holdings from $998.3 billion to $1.01 trillion, while Canada increased its holdings by $38.3 billion to $464.6 billion.

As the U.S. national debt topped $40 trillion and the 30-year U.S. Treasury yield remained above the 5% mark, doubts about Washington's fiscal sustainability intensified in August. To support liquidity in the bond market, the U.S. Treasury Department announced in mid-August that it would expand the repurchase scale of government bonds between 10 and 30 years by at least twice.

At noon on the 16th, the U.S. 30-year Treasury bond yield fell to 5.43% from the recent 24-year high, and the 10-year Treasury bond yield stood at 5.08%.

China continued to reduce its holdings of U.S. debt, and in March last year, it fell behind Japan and the United Kingdom to become the third largest holder of U.S. debt. Rather than further reducing its holdings of U.S. Treasury bonds, China has steadily increased its gold reserves. Official data showed that the People's Bank of China increased its gold reserves to 7.747 million troy ounces (2,400 metric tons) in September, marking the 23rd consecutive month of increases.

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