Core Insights - China's holdings of U.S. Treasury securities have decreased to $730.7 billion by July 2025, the lowest level since 2009 [1] - The decline in U.S. Treasury holdings is part of a strategic defense mechanism rather than a panic sell-off, initiated over a decade ago [3] - The shift away from U.S. debt began in response to geopolitical events, particularly the freezing of Russian assets, which highlighted the risks of holding foreign assets [5] Summary by Sections U.S. Treasury Holdings - By mid-2025, China's U.S. Treasury holdings have dropped significantly, with a reduction of over $50 billion in the first half of the year alone [5] - The reduction has been methodical, with monthly decreases to avoid market panic, including a notable drop of $18.9 billion in March 2025 [5] Shift to Gold - China is reallocating its reserves from U.S. dollars to gold, with official gold reserves reaching 7.406 million ounces (approximately 2,304 tons) by September 2025, marking an 11-month consecutive increase [9] - The strategy aims to diversify reserves and mitigate risks associated with U.S. financial instruments, especially in light of increasing geopolitical tensions [11] Financial Security Strategy - The overarching strategy is to enhance financial autonomy and resilience against external shocks, moving away from a passive financial security model [13] - This shift reflects a broader trend among global central banks, with a reported increase of 166 tons of gold holdings in the second quarter of 2025, indicating a collective move towards "de-dollarization" [15]