Why China Keeps Selling U.S. Treasuries | China Decode

Why It Matters

The shift pressures U.S. financing conditions and challenges the dollar’s dominance, while a Russia‑China energy axis creates new geopolitical risks for Western economies.

Key Takeaways

• Russia-China ties deepen via energy deals, despite pricing disputes.
• Power of Siberia 2 pipeline stalled over gas price disagreements.
• China reduces US Treasury holdings amid Middle East energy shock.
• Global central banks diversify reserves, increasing gold and non-dollar assets.
• Rising 30-year US yields signal higher borrowing costs and inflation risk.

Summary

The episode of China Decode examined the converging strategic partnership between Russia and China, focusing on the stalled Power of Siberia 2 gas pipeline, and China’s recent sell‑off of U.S. Treasury securities against the backdrop of the Middle‑East energy crisis.

Hosts highlighted that the proposed 1,615‑mile pipeline, costing up to $34 billion, would deliver up to 40 billion cubic metres of gas annually, but negotiations have stalled because Beijing seeks prices roughly half of Moscow’s expectations. Meanwhile, China’s foreign‑exchange reserves still hold about half of their $3 trillion in U.S. bonds, yet the PBOC has been off‑loading holdings, pushing the 30‑year Treasury yield above 5 percent—the highest since 2007.

Notable data points included Putin’s 25th visit to Beijing, a 20 % increase in Russian oil imports by China this year, a 20 % rise in total Sino‑Russian trade, and global central banks holding a record $4 trillion in gold, overtaking U.S. Treasury holdings for the first time since the 1990s.

The combined effect threatens U.S. borrowing costs, erodes confidence in the dollar’s reserve‑currency status, and gives Moscow a reliable Asian market for its hydrocarbons, reshaping the strategic calculus for Washington and European policymakers.

Original Description

Alice Han and James Kynge break down why Russia is pushing hard for China to approve the Power of Siberia 2 pipeline, what China’s accelerating selloff of U.S. Treasuries could mean for the American economy, and how China became the first country to commercially approve a brain-computer implant — moving ahead of the U.S. and Elon Musk’s Neuralink.

They also explore the deepening China-Russia alliance, mounting pressure on the U.S. dollar, and whether China is beginning to pull ahead in the global race for technological dominance.

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00:42 The future of a gas pipeline between Russia and China

10:45 China’s massive sell off U.S. treasuries

19:57 The world’s first commercially-approved brain chip

27:37 Predictions