Why China Keeps Selling U.S. Treasuries

The episode highlights how Russia and China have accelerated their partnership since the Ukraine war, forming what the hosts call an "axis of authoritarianism." By aligning diplomatically, economically, and militarily, the two powers present a unified front that reshapes global power balances. Their combined population of 1.55 billion, nuclear capabilities, and complementary economies make the partnership a strategic challenge for the United States and Europe. Analysts note that this rapprochement is the most consequential geopolitical shift of the past decade, forcing Washington to reconsider its containment strategies and alliance structures across Eurasia.

The centerpiece of the Russia‑China tie‑up is the proposed Power of Siberia 2 natural‑gas pipeline. Spanning 2,600 kilometers, the project is estimated at $34 billion and would transport up to 40 billion cubic meters of gas each year—potentially covering half of Russia’s gas exports to China. Although leaders reported a “general understanding,” the deal remains stalled, reflecting financing hurdles, regulatory approvals, and competing energy interests. If completed, the pipeline would lock China into a long‑term reliance on Russian hydrocarbons, deepen economic interdependence, and give Moscow a reliable revenue stream amid Western sanctions.

Concurrently, China’s aggressive sale of U.S. Treasury securities adds another layer of pressure on the dollar‑based financing system. By off‑loading billions of dollars in Treasuries, Beijing signals reduced confidence in U.S. fiscal stability while seeking to diversify its foreign‑exchange reserves. The sell‑off can raise Treasury yields, increase borrowing costs for the U.S. government, and test the resilience of global markets that depend on dollar liquidity. Together with the energy partnership, the financial maneuver underscores a broader strategy to weaken U.S. influence, prompting policymakers to monitor both the pipeline negotiations and Treasury market dynamics closely.