Why China Keeps Selling U.S. Treasuries | China Decode

Axis of authoritarianism emerges

The Russia-China relationship represents the most consequential geopolitical shift of the last decade, creating a combined force of 1.55 billion people and two nuclear powers opposing US influence.

Trade coupling accelerates dramatically

China-Russia trade doubled from 2020 to 2024, with China increasing Russian oil imports by 35% this year and Russia becoming China's largest single crude oil supplier at 20% of imports.

Power of Siberia 2 pipeline stalled

The proposed $34 billion, 1,615-mile pipeline could deliver 40 billion cubic meters of gas annually but remains deadlocked over pricing, with China demanding rates half of Russia's asking price.

US borrowing costs hit 2007 levels

The 30-year US Treasury yield reached 5.2%, the highest since pre-financial crisis, driven by global central banks selling treasuries to fund energy purchases amid Middle East conflicts.

Central banks diversify from dollars

For the first time since the 1990s, global central bank gold holdings ($4 trillion) surpassed US Treasury holdings as concerns grow about US debt sustainability at 120% debt-to-GDP.

China reduces Treasury exposure strategically

China has been selling US Treasuries while maintaining about 50% of its $3 trillion reserves in US bonds, diversifying into gold and other currencies since Russia sanctions began in 2022.

Reverse Kissinger strategy unfolds

The current alignment represents a "reverse 1970s" where Russia and China unite against the US, rather than America playing the two powers against each other as Kissinger did.

Energy politics reshape alliances

Russia's reorientation from Europe-facing to China-facing power demonstrates how sanctions have fundamentally altered global energy flows and geopolitical dependencies.