BRICS member China has made a significant move by dumping a record number of US treasuries and agency debt bonds worth a staggering $53.3 billion.

This historic sell-off occurred during the first quarter of 2024, marking the largest ever initiated by China. The data comes when the US dollar fell to its one-month low at 104.20.

Historical Context and Trends

China and other BRICS countries have been offloading US treasuries worth billions since 2022. According to news reports, the trend has seen China setting records for the highest sell-offs over the last two years.

Economic Concerns

The uncontrolled US debt, now at $34.4 trillion, is a significant concern. It has prompted BRICS nations to rely increasingly on local currencies instead of the dollar. Even Belgium, a close ally of the US, dumped $22 billion worth of treasuries during the same period. This shift indicates that European nations are also beginning to distance themselves from the US economy.

"As China is selling both even though we are closer to a Fed rate-cut cycle, there should be a clear intention of diversifying away from US dollar holdings," said Stephen Chiu, Chief Asia Foreign-Exchange and Rates Strategist at Bloomberg Intelligence.

Gold Accumulation

While China is offloading US treasuries, it is simultaneously accumulating gold in its reserves. China and the BRICS alliance have emerged as the largest buyers of gold in 2022, 2023, and 2024. Last year alone, China added several tonnes of gold worth $550 billion to its reserves. This strategic move underscores the bloc's intention to diversify its holdings away from US dollar-denominated assets.

Implications for the Future

China and the BRICS bloc are steadfast in distancing themselves from the US dollar, treasuries, and government debt bonds.

This development is part of the recently announced decision to end their dependency on the US dollar.