China’s US Treasury holdings may be substantially higher than official figures suggest, with bonds potentially being held through custodians in Canada and Europe rather than recorded under Beijing’s name.
US data released on Friday showed China held $591 billion in Treasury securities in August, the lowest level for 18 years. That was down from $700 billion a year earlier and from about $1 trillion in April 2022.
However, the figures are compiled mainly from US-based custodians and broker-dealers. The US Treasury Department has warned that securities held in overseas custody accounts may not be attributed to their actual owners.
That limitation has prompted China watchers to question whether Beijing has been selling US assets on the scale suggested by the data. Large increases in reported holdings elsewhere have coincided with the fall in China’s recorded Treasury portfolio.
China’s Treasury holdings may be hidden overseas
Canada’s reported holdings rose to $465 billion in August, from $169 billion in the same month five years earlier. Belgium’s stockpile increased to $490.5 billion, compared with $228 billion over the same period.
The totals become larger when securities backed by US federal housing agencies are included. The increases have fuelled speculation that some Chinese assets could have been transferred to non-US custodians, leaving them absent from official figures attributed to China.
Brad Setser, a senior fellow at the Council on Foreign Relations and a former US Treasury official, said the case for China using a Canadian custodian for some of its agency bonds was particularly strong.
“The evidence that China uses a Canadian custodian for some of its Agencies is especially strong — note the sudden jump in Canada’s holdings and the big impact of the detailed June survey at some early points,” he posted on X.
Setser wrote in May that Treasury securities held through custodians in the UK, France, Luxembourg and Belgium had increased sharply since about 2020. Combining China’s recorded holdings with those in Canada and the European custodial centres could add as much as $500 billion, he estimated.
An assessment limited to Canada, Luxembourg and France since about 2022 would put the additional holdings at roughly $300 billion, according to the analysis.
China has reduced its holdings of longer-term Treasuries while increasing its holdings of short-term bills. Even so, Setser estimated that US financial assets still account for between 50 and 55 per cent of China’s reserve portfolio.
“Both the Treasury and the Agency portfolios need to be adjusted for the bonds that China keeps on custody in Canada and in Europe,” he said. “That adds to uncertainty around the estimate, as it seems likely that China is now using multiple non-U.S. custodians to mask its true holdings.”
Beijing has sought to challenge the dollar’s dominance in global finance, while US sanctions imposed on Russia after its invasion of Ukraine encouraged China’s central bank and others to diversify reserves towards assets such as gold.
Trade tensions with the US have added to the pressure to reduce reliance on Treasuries. At the same time, China’s weak domestic demand, property crisis and debt burden have increased its reliance on exports.
China recorded a trade surplus of $1.2 trillion in 2025, the largest on record. In the first nine months of 2026, the surplus reached $938 billion, raising the prospect of a further annual record and leaving Beijing with large sums to recycle into overseas assets.
