China's De-Dollarization Story Leaves Out a US$600 Billion Treasury Buildup
As of August 2026, U.S. Treasury Department data credited Belgium with US$490.5 billion of U.S. government debt, a figure far larger than anything its own economy would explain. Over the same stretch, China's official holdings slid to about US$775 billion by mid-2024. That was a 15-year low, and well down from the US$1.3 trillion peak back in 2013.
Put those two lines side by side and the de-dollarization story gets more complicated. Analysts estimate the buildup in indirect Treasury holdings at around US$600 billion. A good share of the demand that appears to have left the market has most likely changed address and stayed. For anyone using foreign-demand data to judge where yields, the dollar or North American borrowing costs are heading, that difference changes the conclusion.
Country lines show where bonds sit
The Treasury International Capital (TIC) data that most of us cite records holdings by the location of the custodian, the institution that physically holds the securities. It does not record the final owner. Belgium is home to Euroclear, one of the world's largest clearing and settlement houses. When a central bank or a large fund keeps its Treasuries in an account there, the bonds get counted as Belgian.
Read that way, "Belgium" in a holdings table works like a giant safe-deposit box. Luxembourg and the Cayman Islands play a similar role. So when one country's line falls and a custody hub's line rises in the same period, treat the two as a single trend until you have a reason to separate them.
Why a sovereign holder would move its address
Sanctions risk gives a large holder a clear motive. After Western governments froze Russian central bank assets in 2022, every reserve manager had to think about how visible their holdings were. Bonds held through a third-party custodian are harder to single out from the outside.
The motive to keep buying never went away. China runs a large trade surplus with the U.S., which leaves it holding dollars that need somewhere to earn interest. The Treasury market is still the only one deep and liquid enough to absorb surpluses on that scale and still let a seller turn bonds into cash quickly. High U.S. rates through 2024 made the trade even easier to justify against yields at home or in Europe.
There's a fair counterpoint. Some of the growth in Belgium, Luxembourg and the Caymans reflects hedge funds and private institutions choosing those hubs for ordinary operational reasons. Not every offshore dollar is a disguised sovereign one, and the data cannot tell you the split.
Separating diversification from relocation
China has added meaningfully to its gold reserves over the past few years, and that part is real diversification. It shows a reserve manager trying to hold less of its rainy-day money in dollars. It also sits alongside continued Treasury exposure, much of it held less visibly.
Canada adds another layer. Canadian banks and pension funds emerged as significant buyers of Treasuries in 2024 and 2025, often raising holdings during market stress to keep liquidity on hand. With roughly C$3.6 billion in goods crossing the border every day, those flows are part of how two tightly linked economies manage risk. They don't tell you anything about Beijing.
Keep the reporting lag in mind too. TIC figures arrive months after money moves, so a custodial shift usually shows up only once it is well under way.
What steady demand means for borrowing costs
Treasury yields help anchor bond yields across North America, including the Government of Canada yields that fixed mortgage rates in Alberta tend to follow. Large, persistent buying, even through a custodian, keeps that anchor steadier than it would be if these buyers truly walked away. If you're watching for a foreign buyers' strike to push yields sharply higher, the custody data says that strike has not arrived.
Next time a headline reports China cutting its Treasury holdings, add the custody hubs back in before you decide whether demand fell or simply moved.
As of August 2026, U.S. Treasury Department data credited Belgium with US$490.5 billion of U.S. government debt, a figure far larger than anything its own economy would explain. Over the same stretch, China's official holdings slid to about US$775 billion by mid-2024. That was a 15-year low, and well down from the US$1.3 trillion peak back in 2013.
Put those two lines side by side and the de-dollarization story gets more complicated. Analysts estimate the buildup in indirect Treasury holdings at around US$600 billion. A good share of the demand that appears to have left the market has most likely changed address and stayed. For anyone using foreign-demand data to judge where yields, the dollar or North American borrowing costs are heading, that difference changes the conclusion.
Country lines show where bonds sit
The Treasury International Capital (TIC) data that most of us cite records holdings by the location of the custodian, the institution that physically holds the securities. It does not record the final owner. Belgium is home to Euroclear, one of the world's largest clearing and settlement houses. When a central bank or a large fund keeps its Treasuries in an account there, the bonds get counted as Belgian.
Read that way, "Belgium" in a holdings table works like a giant safe-deposit box. Luxembourg and the Cayman Islands play a similar role. So when one country's line falls and a custody hub's line rises in the same period, treat the two as a single trend until you have a reason to separate them.
Why a sovereign holder would move its address
Sanctions risk gives a large holder a clear motive. After Western governments froze Russian central bank assets in 2022, every reserve manager had to think about how visible their holdings were. Bonds held through a third-party custodian are harder to single out from the outside.
The motive to keep buying never went away. China runs a large trade surplus with the U.S., which leaves it holding dollars that need somewhere to earn interest. The Treasury market is still the only one deep and liquid enough to absorb surpluses on that scale and still let a seller turn bonds into cash quickly. High U.S. rates through 2024 made the trade even easier to justify against yields at home or in Europe.
There's a fair counterpoint. Some of the growth in Belgium, Luxembourg and the Caymans reflects hedge funds and private institutions choosing those hubs for ordinary operational reasons. Not every offshore dollar is a disguised sovereign one, and the data cannot tell you the split.
Separating diversification from relocation
China has added meaningfully to its gold reserves over the past few years, and that part is real diversification. It shows a reserve manager trying to hold less of its rainy-day money in dollars. It also sits alongside continued Treasury exposure, much of it held less visibly.
Canada adds another layer. Canadian banks and pension funds emerged as significant buyers of Treasuries in 2024 and 2025, often raising holdings during market stress to keep liquidity on hand. With roughly C$3.6 billion in goods crossing the border every day, those flows are part of how two tightly linked economies manage risk. They don't tell you anything about Beijing.
Keep the reporting lag in mind too. TIC figures arrive months after money moves, so a custodial shift usually shows up only once it is well under way.
What steady demand means for borrowing costs
Treasury yields help anchor bond yields across North America, including the Government of Canada yields that fixed mortgage rates in Alberta tend to follow. Large, persistent buying, even through a custodian, keeps that anchor steadier than it would be if these buyers truly walked away. If you're watching for a foreign buyers' strike to push yields sharply higher, the custody data says that strike has not arrived.
Next time a headline reports China cutting its Treasury holdings, add the custody hubs back in before you decide whether demand fell or simply moved.
Sources
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