China’s accumulation of US Treasuries has held constant in recent years despite mounting geopolitical tensions between Beijing and Washington, according to an analysis of treasury department data by economist Brad Setser.
Setser said in a thread posted on his Twitter account that China remains the second-largest holder of US Treasuries after Japan, based on Treasury International Capital (TIC) data.
“China’s fairly visible holdings of US bonds have stayed constant for the last 5ys (at ~ $1.6 trillion)” Setser wrote.
According to Setser, even this official data still obscures the full extent of China’s Treasury purchasing activity, however, as the People’s Bank of China (PBOC) makes use of a euroclear account in Belgium to hold US bonds.
“China isn’t selling,” Setser wrote. “Neither the transactional data nor the custodial data fully capture China’s activity..the big increases in foreign holdings recently have come from the UK, Belgium (likely China) and the Caymans.”
By sharp contrast, Japan’s holdings of US securities appear to “dropping like a rock,” based on consistencies between Japanese and US data.
“Japan reports the market value of the securities it holds in its reserves (as well as its actual intervention) and the US data shows the market value of Japan’s holdings,” he wrote. “The changes recently have lined up nearly perfectly.”