China Reshapes Its Reserves, Cutting U.S. Treasuries and Stockpiling Gold

Global financial markets have witnessed unprecedented shifts in recent weeks as China, the world’s second-largest economy, undertook significant changes in its official reserves. Beijing has drastically reduced its holdings of U.S. Treasury securities to the lowest level in nearly 17 years, while simultaneously expanding its gold reserves, signaling a strategic realignment amid rising geopolitical and economic tensions. 

Historic Decline in U.S. Treasury Holdings

Official data from the U.S. Treasury Department shows that China’s holdings of U.S. Treasuries dropped to approximately $682.6 billion in November 2025, down from $688.7 billion in October of the same year, marking the lowest level since 2008. This decline continues a long-term trend from a peak of around $1.32 trillion in 2013. 

This move reflects China’s ongoing policy to reduce reliance on dollar-denominated assets, even as other major holders such as Japan and the United Kingdom increased their U.S. Treasury positions over the same period. 

Strategic Shift Toward Gold and Diversification

In contrast, China has steadily increased its gold reserves, with the People’s Bank of China reporting holdings of approximately 74.15 million ounces by the end of December 2025, extending a 14-month consecutive accumulation streak. 

Analysts view this pattern as a calculated strategy to rebalance the reserve portfolio, reducing exposure to potential risks tied to U.S. Treasury securities while enhancing resilience against geopolitical and financial uncertainties. 

Broader Geopolitical and Economic Context

The shift also reflects Beijing’s increasing focus on mitigating risks associated with U.S. fiscal and monetary policies, particularly concerns over the Federal Reserve’s independence and the sustainability of U.S. federal debt. 

Economists emphasize that China is not seeking a “financial confrontation” with the U.S. dollar but rather diversifying its reserves and reducing reliance on U.S. Treasuries as a long-term strategic measure. 

Implications for the Global Financial System

This strategic shift comes at a time when economic tensions between the U.S. and the European Union, as well as between the U.S. and parts of Asia, are dominating financial news, increasing global market uncertainty and elevating the role of safe-haven assets such as gold. 

China’s continued accumulation of gold and reduction of U.S. Treasury exposure is being viewed as a reconfiguration of global economic power balances, likely affecting demand for safe-haven assets and investment patterns worldwide in the coming period.