Reuters reported Treasury Department statistics on August 15 that China cut its holdings of U.S. Treasuries for the seventh consecutive month in June.
In June, China’s holdings of U.S. government debt dropped to $967.8 billion, the lowest level since May 2010. In May, the world’s second-biggest economy had $980.8 billion in Treasuries. China’s volume of U.S. debt has hit several 12-year lows in recent months.
According to Reuters, the U.S. dollar has been mostly stable against the Chinese yuan since hitting a nearly 20-month high in mid-May, falling about 1%. The dollar last rose 0.5% at 6.7755 yuan.
From June 2021 to June 2022, China is the second holder of U.S. debt while Japan is the largest foreign holder, holding $1.3 trillion in Treasury securities. 16.8% of the foreign-owned U.S. debt is held by Japan.
A.P. reported the People’s Bank of China cut its rate on a one-year loan from 2.85% to 2.75%. It also injected an extra $60 billion into lending markets to support a distressed economy after factory outputs and retail sales growth slowed in July and home sales dropped by double digits.
In early August, Speaker of the House Speaker Nancy Pelosi, the highest-ranking U.S. official, visited Taiwan in 25 years, infuriating China.
After Pelosi’s trip, China later announced it was halting dialogue with the U.S. in several areas, including between theater-level military commanders and climate change.