China was once the top holder of U.S. Treasuries but has been shedding its massive stockpile for years, fueling fears of de-dollarization, but official data may not fully capture Beijing’s actual portfolio.

The decline began in earnest around 2021, but as recently as April 2022, China still held $1 trillion in Treasury securities. U.S. data on Friday show that’s been whittled down to just $591 billion as of August, the lowest in 18 years and down from $700 billion a year earlier.

But the data is collected primarily from U.S.-based custodians and broker-dealers, according to the Treasury Department, which adds that U.S. securities held in overseas custody accounts may not be attributed to the actual owners.

As a result, China watchers have long been skeptical of a wholesale dumping of U.S. assets, pointing to suspicious jumps in Treasury holdings elsewhere that coincide with the steep Chinese drop.

Canada’s holdings soared to $465 billion in August from just $169 billion in the same month five years ago. Similarly, Belgium’s stockpile shot up to $490.5 billion from $228 billion over the same span. After including other bonds backed by federal housing agencies, the numbers are even more staggering.

To be sure, China has been challenging the U.S. for supremacy in global finance, seeking to unseat the dollar as the world’s top currency.

U.S. sanctions against Russia after its 2022 invasion of Ukraine further encouraged the People’s Bank of China and other central banks around the world to diversify away from dollar reserves and toward alternative assets like gold.

President Donald Trump’s trade war, which has been particularly focused on China, gave Beijing more reasons to ditch Treasuries and decouple from the U.S.

But at the same time, China has relied more heavily on export-led growth in recent years as domestic demand remains stagnant amid the festering property crash and debt hangover.

So despite the friction with the U.S. and other trade partners, China posted a $1.2 trillion trade surplus in 2025—the largest in recorded history—growing three times faster than global goods trade.

This year looks to break that record. For the first nine months of 2026, China’s trade surplus reached $938 billion, with expectations growing that it could surpass last year’s milestone.

Such massive surpluses must be recycled back somewhere, perhaps leading China to shift its Treasury debt to non-U.S. custodian banks in other countries—and not show up as “China” in official U.S. data.

“The evidence that China uses a Canadian custodian for some of its Agencies is especially strong — note the sudden jump in Canada’s holdings and the big impact of the detailed June survey at some early points,” Brad Setser, a senior fellow at the Council on Foreign Relations and a former Treasury official, posted on X on Wednesday while highlighting a Bloomberg story on the subject.

Council on Foreign Relations

In May, he wrote a deep dive into China’s holdings. Since about 2020, there’s been a huge increase in Treasuries held in custodians in the United Kingdom, France, Luxembourg, and Belgium.

Adding up China’s holdings with those in Canada and the European custodial centers results in a total as high as $500 billion. Even an adjustment that looks only at Canada, Luxembourg, and France since about 2022 puts China’s holdings at around $300 billion.

While China has reduced its stash of long-term Treasuries and increased short-term bills, Setser estimated that China’s total U.S. financial holdings remain between 50% and 55% of its reserve portfolio.

“Both the Treasury and the Agency portfolios need to be adjusted for the bonds that China keeps on custody in Canada and in Europe,” he said. “That adds to uncertainty around the estimate, as it seems likely that China is now using multiple non-U.S. custodians to mask its true holdings.”