Chart of the Day: China’s U.S. Treasury Hoard Diminishes for Fifth Straight Month

Beijing’s holdings of U.S. Treasurys shrank for a fifth consecutive month in October, falling to the lowest point since May 2017 as the country beefs up measures to support the yuan amid the China-U.S. trade war.

The country’s holdings of U.S. Treasury bills, bonds and notes declined by around 1.09% to $1.14 trillion at the end of October, down $12.5 billion from a month earlier, according to data published Monday by the U.S. Treasury Department.

China is the largest foreign holder of U.S. debt, accounting for about 18.4% of the total in October. Japan, the second-largest foreign holder, decreased its U.S. Treasury assets by $9.5 billion from a month earlier to around $1.02 trillion at the end of October, according to the official U.S. data.

Graphic: Gao Baiyu/Caixin

It has been a tough year for the yuan, which hit a 10-year low against the dollar in October and is close to a key psychological barrier of 7 yuan per dollar. Fears have grown in the market that the government might try to stimulate exports by devaluing the currency, but experts said in October that authorities are unlikely to let the currency weaken past the 7 per dollar anytime soon.

U.S. President Donald Trump and Chinese President Xi Jinping declared a 90-day trade war truce on Dec. 1, with an agreement to delay the imposition of higher tariff rates from Jan. 1 until around March 1.

Contact reporter Tang Ziyi (ziyitang@caixin.com)