Why China just told its banks to dump US Treasury bonds
by Inside China Business [2-10-2026].
Bond yields in the United States have risen sharply since just five years ago. Lenders and bond investors have paper losses of nearly 20% on its US Treasury portfolios since that time.
This poses serious challenges for banks, with large US Treasury holdings. They need their reserves to hold value over time, to capitalize the institution, and to collateralize new loans.
China's banking regulators have instructed their largest banks to cease new purchases of US government debt, and to strongly consider selling existing holdings.
The Chinese government itself has slashed its holdings of US Treasury bonds, which are at the lowest level in eighteen years.
Closing scene, Taicang, Jiangsu
Resources
China urges banks to curb US Treasuries exposure, Bloomberg News reports [2-9-2026] Chinese regulators have advised financial institutions to curb holdings of U.S. Treasuries due to concern over concentration risk and market volatility, Bloomberg News reported on Monday, citing people familiar with the matter.
China Urges Banks to Curb Exposure to US Treasuries [2-9-2026]
Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis (DGS10) [3-30-2026]