China Diversifies Away From US Dollar

Written by Swiss America

piggy 4341875 640China diversifying FX reserves, assets to counter US dollar exposure -CNBC
"China is heavily exposed to the U.S. dollar, but now, with the risk of 'decoupling,' Beijing is silently diversifying its reserves to reduce its dependence on the world's largest reserve currency, analysts say.

Ongoing trade tensions with the U.S. has 'increased the risk of a financial decoupling' between the two largest economies, ANZ Research said in a recent report. The White House reportedly considered some curbs on U.S. investments in China such as delisting Chinese stocks in the U.S....'The pace of diversification into other currencies will likely quicken going forward,' ANZ says in the report, adding that the share of the dollar in the country's foreign exchange reserves was estimated to be around 59% as of June. Meanwhile, Beijing is gradually reducing its holdings of U.S. Treasurys, which it is heavily invested in - China was the largest foreign holder until June, when it was surpassed by Japan. Since peaking in 2018, China has reduced its holdings by $88 billion in the last 14 months, DBS said in a note....The world's second-largest economy has been pushing for greater, more globalized use of the yuan. Efforts are likely to continue to reduce the world's reliance on the dollar, said Roache."

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