China Reportedly Directs Banks To Cut US Treasury Holdings—Peter Schiff Warns Of 'Soaring' Consumer Prices
Chinese regulators have told financial institutions to limit their purchase of U.S. treasuries amid concentration risks and market volatility. Those with high exposure to the bonds have been advised to reduce their holdings, reported Bloomberg on Monday.
Notably, the advice is not applicable to Chinese state holdings of U.S. government bonds. The publication reported that the directive had been issued to the financial institutions before the recent call held between President Donald Trump and Chinese President Xi Jinping.
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As per U.S Treasury data, China’s holding is worth $682.6 billion as of November 2025, the third-largest after Japan and the UK.
Economist Peter Schiff said that China’s move will mainly prompt the Federal Reserve to buy the bonds, creating inflationary conditions for consumers.
“That will send consumer prices soaring,” he wrote on X.
China has advised its banks to sell U.S. Treasuries. That is very good advice. Soon foreign governments and many private investors will be selling U.S. Treasuries. The main buyer will be the Fed, creating inflation that will send consumer prices soaring. https://t.co/GGNU9tT9EQ
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US Treasuries Sale Raise Alarm
China’s move comes weeks after Danish pension fund AkademikerPension, with funds of $25 million, reportedly planned to offload U.S. treasuries amid credit risk tied to U.S. fiscal and political upheavals. The Chief Investment Officer of the fund, Anders Schelde, raised questions on the quality of the U.S. government bonds and stated that government finances are “not sustainable.” Several economists have previously warned that the $38 trillion debt poses a massive threat to the global financial perception of the U.S.
Treasury Secretary Scott Bessent had brushed off the concerns, but Sen. Elizabeth Warren (D-Mass.) raised alarm over the potential development. She said it would be a “huge deal” if the world curbs U.S. Treasury purchases, as it would translate to higher rates for car loans and mortgages.
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At the same time, Geng Ngarmboonanant, managing director at JPMorgan Chase & Co., and former deputy chief of staff to ex-Treasury Secretary Janet Yellen, had told that foreign governments, which held nearly 40% of the U.S. debt in 2010, have now lowered their holdings to 15%, and that the investors should be concerned about this.
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