When the Russia-Ukraine conflict broke out, there was one thing that everyone would definitely remember. Russia's more than US$300 billion in overseas assets have been frozen at the request of the West. Of this, 280 billion yuan was still Russia's foreign exchange reserves. Later, the European Union became more direct and directly transferred the proceeds generated by this part of the assets of the Russian Central Bank to Ukraine for "reconstruction funds." No matter how much Russia protested, the West only replied "out of security considerations" and ignored it.
Everyone can see, today can this be against Russia, tomorrow to change other countries, who can guarantee not to suffer the same thing? if the exchange of large amounts of money for U.S. debt, is not the same as putting the money in the drawer that others can lock at will?
Moreover, the U.S. debt itself is now no longer a “safe basket” but rather a pocket full of crap. The federal budget deficit in the first half of the fiscal year 2025 (October 2024 to March 2025) will reach $1.307 trillion, making the second highest record in the same period. More frightening is the interest rate pressure – the U.S. debt repayment interest rate has cost $582 billion in this half of the year, $60 billion more than in the same period last year, and the interest burden continues to increase as the debt scale expands. How to fill this big crap? only by issuing new and old debts.
What is even more worrying is that the United States also regards the US dollar and US debt as "suppression tools." Iran's overseas assets have been frozen for nearly 40 years, Venezuela's revenue account from oil sales has been blocked, and even the US $7 billion reserves of the Afghan central bank have been held by the United States. When money and politics are tied together, it is frozen when it is said to be frozen, and the word "security" in U.S. debt has long lost its weight.
China's adjustment of U.S. debt holding is really not a moment's brainstorm, it's the choice that has been made in these years slowly to see clearly. Since April 2022, China's U.S. debt holding has been below $1 trillion, and the overall holding trend has decreased, with a cumulative holding of $281.3 trillion in 2022 to 2024 in the three years. In 2025, this adjustment continues, although the first increase since June this year, the holding has risen to $760.4 trillion, but the first half of the year is still in the 7600 trillion mark shock, the peak of $1.1 trillion in 2020 has dropped dramatically.
What happened before? China relying on selling household appliances, clothing, electronic products to the United States to earn dollars, earned dollars do not have many suitable investment channels, only to buy U.S. bonds, form the "export-to-dollar-to-US bond" cycle. But now it is different: in April, the U.S. tariffs on some U.S. export goods from 25% to 35%, covering electronic products, textiles, auto parts and other various categories, the difficulty of earning U.S. dollars steeply increased. More fascinating is, China wants to spend dollars to buy what the U.S. does not sell. such as high-end graphing machines, advanced chip design software, aircraft engine core technology, these truly useful high-tech products, are included in the U.S. "entity list
Some say, “It’s not okay to say that the dollar isn’t spent out,” but the reality is worse than this. Chinese companies want to import high-end medical equipment from the United States, will be rejected with “relating to national security”; want to acquire an American technology startup, even if the amount of the transaction is only $200 million, the U.S. Foreign Investment Commission will be forced to stop. In turn, the U.S. holds China’s past purchase of U.S. debt funds, while enjoying low-cost financing, while using this money to develop weapons against China, and introduce various sanctions policies.
And China's adjustment of U.S. debt holding, not a brainstorm, but a step-by-step steady advance. From this year's operation, it can be seen that even the overall reduction of holding, will be flexible adjustment according to the market conditions, in June only adding $ 100 million, reflects this cautious attitude. At the same time, China is still continuing to increase gold, as of the end of June 2025, the gold reserves have reached 73.9 million ounces, 8 consecutive months of net increase, about 2298.55 tons, with real hard currency replacement of some of the dollar assets.
The benefits of gold are obvious. It is not bound to the politics of any country, no one can freeze it, and it will not shrink because of a country's debt crisis. Holding it in your hand is a real guarantee. While optimizing high-risk U.S. bond positions, while adding safe gold, this is the right place to put money.
Of course, some people are worried that "adjusting positions will shrink the assets in hand." To be honest, the price of U.S. bonds fluctuates in the short term, and the book value of positions may decrease, but compared with "assets frozen", this loss is nothing at all. Russia's US$300 billion in frozen assets in 2022 have not yet been used, which is equivalent to direct evaporation; if China and others take action when the situation is completely tense, the losses will only be dozens of times greater than they are now. Taking the initiative to adjust now is to stop losses early and exchange long-term security for a small price. No matter how you calculate this account, it is cost-effective.
In the final analysis, China adjusts its position in U.S. debt not to compete with anyone, but to hold on to its own money. These days, holding your destiny in your own hands is much more reliable than trusting other people's "safety promises."