Analysts note that China is selling some US Treasury securities while continuing to buy more US bonds. This view was discussed on a Telegram channel by economist Evgeny Kogan, a professor at the Higher School of Economics.
In discussing China’s active trading of US government debt, media coverage sometimes frames the move as an effort to punish an economic rival. Yet looking at the broader use of China’s revenue reveals a more nuanced picture.
According to Kogan, part of China’s revenue may be deployed to support the yuan’s exchange rate or to help cover the budget deficit. Yet data from last year show that purchases of US agency bonds rose significantly, with investments in these securities increasing by $55 billion over the year.
He highlighted that after market revaluations, China’s net purchases of US bonds in 2022 topped $122 billion. This refers to investments in other forms of US government debt that proved more profitable than standard government bonds for investors seeking stability and yield.
Recent data published by the US Treasury on December 16 indicate that Russian holdings of US government bonds stood just over $2 billion in October. This comes as Russia began a pronounced reduction of its holdings since spring 2018, with levels dropping from about $96 billion to $48.7 billion in April 2018 and down to $14.9 billion by May of the following year.