The Financial Decoupling: De-dollarization Goes Mainstream
Connect these dots: THE ACTORS: The principal actors are the People's Bank of China (PBOC) and China's major state-owned commercial banks, alongside the US Treasury Department as the creditor. The PBOC, as China's central bank, exercises significant control over the financial policies of institutions like the Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), and
Agricultural Bank of China (ABC). THE FUNDING: China's holdings of US Treasury bonds have historically fluctuated, peaking around $1.3 trillion in 2013-2014. By late 2025 (data updated February 2026), these holdings had reportedly decreased to approximately $750 billion (US Treasury data, 2025), a reduction of over $500 billion from its peak. This phased reduction has been an ongoing, deliberate
process. The directive, if accurate, signals a formalization and acceleration of this trend, aiming to further decrease exposure. THE INCENTIVES: China's incentives are multi-layered. First, it's a risk mitigation strategy. Concerns over potential US sanctions (as seen with Russia's frozen reserves in 2022) drive a desire to reduce vulnerability. Second, it's a strategic de-dollarization effort,
aiming to reduce reliance on the US dollar and promote the internationalization of the yuan. This aligns with China's broader geopolitical objective of creating a multipolar economic order. Third, it's a domestic economic imperative; divesting from low-yield US debt can free up capital for domestic investment and stimulate internal consumption, a stated goal of the Chinese government's 'dual