JP MORGAN CHASE(US:JPM) Sou Hu Cai Jing·2026-01-19 16:53Core Viewpoint - China has significantly reduced its holdings of US Treasury bonds, reaching a total of $682.6 billion, the lowest level since the 2008 financial crisis, marking the ninth consecutive month of reduction and a halving from its peak of over $1.3 trillion in 2013 [1][3]. Group 1: China's Actions and Implications - In contrast to China's reduction, foreign investors increased their holdings of US Treasury bonds by $112.8 billion, reaching a record $9.36 trillion, with traditional buyers like Japan and the UK increasing their investments [3]. - China's central bank has been increasing its gold reserves, which reached 74.15 million ounces by the end of December 2025, indicating a strategic shift from dollar assets to gold [3]. - The reduction in US Treasury holdings is seen as a strategic financial response to geopolitical pressures and concerns over the stability of US debt [9][15]. Group 2: Concerns Over US Debt - The total US national debt surpassed $38 trillion by the end of 2025, with annual interest payments exceeding $1 trillion, raising alarms about the sustainability of this debt model [4][6]. - Analysts have likened the US debt issuance model to a "Ponzi scheme," requiring continuous new buyers to maintain the system, which poses risks if confidence wanes [6]. - The independence of the Federal Reserve is under scrutiny, especially after reports of political pressure on its chairman, which could undermine the credibility of US monetary policy and the value of the dollar [6][15]. Group 3: Geopolitical Context - China's reduction of US Treasury holdings coincides with increased military provocations from the US, such as naval operations in the Taiwan Strait, which are perceived as threats to China's core interests [7][9]. - The US is attempting to form alliances to reduce reliance on China in high-tech supply chains, which China views as a comprehensive strategy of containment [7][9]. - Despite the tensions, there are ongoing discussions about a potential visit by former President Trump to China, reflecting the complex nature of US-China relations, characterized by both competition and dialogue [10][13].