BANGKOK, Thailand – Dr. Kobsak Pootrakool, a prominent Thai macroeconomist, senior banking executive and former government minister, has raised questions over China’s steadily declining holdings of US government bonds, which have now fallen to their lowest level in 18 years. China, once the largest foreign creditor of the United States, previously held more than US$1.3 trillion in US Treasuries. Its holdings have declined steadily over several years, particularly since 2021, as tensions between the world’s two largest economies have intensified. The shift has unfolded amid disputes over trade and technology, as well as growing competition over security and geopolitics.
At the same time, China has increased its holdings of gold, prompting Dr. Kobsak to question why Beijing is reducing its exposure to US government debt while building up its gold reserves. The changing pattern marks a significant shift from an earlier era when China’s huge holdings of US debt were seen as an important feature of the economic relationship between Beijing and Washington. Dr. Kobsak’s observation raises a broader question about China’s reserve strategy: What does China see that others may not?
