Kelvin Testimony Amachree
China, a member of the BRICS nations, has been actively reducing its dependence on the US economy by selling off billions of dollars’ worth of US treasuries and agency debt over the past seven months. This move is a significant step towards de-dollarization, a key agenda item for the BRICS nations.
Instead of holding US treasuries, China is accumulating gold reserves. The People’s Bank of China has reported holdings of 2,250 tonnes of gold in 2024, valued at approximately $159 billion. This shift away from US treasuries and towards gold is a clear indication of China’s desire to reduce its reliance on the US dollar for international trade.
The implications of this move are far-reaching. Reduced demand for US treasuries could lead to higher interest rates, impacting borrowing costs and the overall economy. De-dollarization could also lead to decreased US trade and economic influence, potentially impacting exports and imports. Furthermore, the Federal Reserve’s ability to manage the economy through monetary policy could be compromised.
The BRICS nations have been the largest buyers of gold since 2022, replacing US treasuries in their reserves with the precious metal. This trend is likely to continue, with China leading the charge. As the US dollar’s status as a global reserve currency is challenged, the US may face significant economic and geopolitical consequences. The de-dollarization efforts of BRICS nations, led by China’s significant reduction in US treasury holdings, may have far-reaching consequences for the US economy and global trade dynamics.
BRICS: $74 Billion Worth of U.S. Treasuries Dumped By China in 7 Months
China has made a significant move in reducing its dependence on US treasuries, selling a staggering $74 billion worth of US treasuries and agency bonds in just seven months. This move is a clear indication of China’s lack of confidence in holding US treasuries, particularly due to the growing $34.4 trillion debt.
In the first quarter of 2024 alone, China offloaded $53.3 billion worth of US treasuries, with an additional $21 billion worth of US treasuries and agency bonds sold in the last few months of 2023. This substantial reduction in US treasury holdings is a cause for concern, as the US economy relies heavily on investments from offshore.
China’s diversification of its assets is a strategic move, with the country increasing its gold reserves to the highest share of its reserves since 2015. As the top buyer of gold since 2022, China is replacing US treasuries in its reserves with the precious metal. This shift away from US treasuries is a significant step towards de-dollarization, a key agenda item for the BRICS nations.
The implications of China’s move are far-reaching, adding pressure on the American economy as developing countries move away from investing in treasuries. The US economy needs foreign investments to fund its debt, and China’s reduction in US treasury holdings could lead to higher interest rates and borrowing costs. As BRICS nations continue to advance in their de-dollarization quest, the US economy may face significant economic and geopolitical consequences.