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| Economy |
| The China ‘Dumping’ Illusion |
| 2026-04-26 |
| [Lance Roberts, Real Investment Advice (an excerpt from this larger article with graphs)] If one chart carries the de-dollarization narrative more than any other, it is the headline decline in China’s reported U.S. Treasury holdings. Those holdings in "US Custody" declined from roughly $1.2 trillion at peak to about $683 billion today. That looks like a 50% purge, and it gets rolled out as Exhibit A in every "dollar is dying" thread. Pay attention to the highlight of "US Custody." As we detailed in our two recent pieces, "Is China Really Dumping US Treasuries?" (February 23) and "The Dollar’s Plumbing: Conspiracy Vs. Data" (March 20), that chart is genuinely misleading. The Treasury’s own TIC FAQ flags the problem: holdings are reported by the location of custody, not by who bears the economic risk. China has been quietly migrating that custody, not liquidating it. The evidence is in the data for two very small countries. As of November 2025, Belgium reported $481 billion in Treasury holdings and Luxembourg $425 billion, enormous totals for nations not remotely building reserves at that scale. Belgium is home to Euroclear; Luxembourg hosts Clearstream, and both countries are global settlement hubs. Over the period, China’s reported holdings fell by roughly $600 billion, Belgium’s rose by roughly $500 billion. Over the last twelve months, the UK, Belgium, and Japan were each net Treasury buyers of more than $115 billion, with Belgium’s holdings up 26%, the largest percentage gain among major holders. As noted in that article: "This is not a conspiracy. It is plumbing. One of the primary reasons that China uses Belgium for custodial purposes, besides avoiding geopolitical risk, is that the Euroclear Bank is based there and sits at the center of cross-border settlement and collateral mobility. Clearstream’s international depository is based in Luxembourg and serves the same global institutional client base. When a central bank or a state institution wants to hold a large Treasury portfolio with flexible settlement and collateral options, these hubs help address operational challenges." If we adjust China’s reported Treasuries to account for the custody migration to Euroclear and Clearstream, the total barely changes from its 2011 level. Meanwhile, total foreign holdings of U.S. Treasuries hit a record $9.4 trillion in November 2025. This is post-2022-sanctions risk management, not de-dollarization, and the dollar exposure is staying put. The plumbing changed. The balance did not. |
| Posted by:DooDahMan |