BRICS
February 23, 2026
China not dumping US Treasuries is the reality that cuts through the constant de-dollarization noise. While financial media and BRICS dollar strategy advocates keep pushing the idea that Beijing is moving away from dollar assets, China’s state banks bought over $100 billion in foreign exchange in December and another $70 billion in January, totaling $170B in US Treasury-linked dollar assets in just two months. China dollar reserves are growing, just not where most analysts are looking, and China US Treasury buying hasn’t slowed one bit.
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Why China’s $170B US Treasury Buying Spree Defies BRICS Expectations
The Numbers Don’t Lie
China not dumping US Treasuries becomes obvious once you look past the PBoC’s formal balance sheet. The dollars being accumulated are warehoused by state-owned financial institutions, not the central bank directly. China’s State Administration of Foreign Exchange holds $3.4 trillion in reserves, with an estimated 50-55% in dollars. State banks hold another $3 trillion, roughly 70% in dollars, plus $1.65 trillion in disclosed foreign assets.
Brad Setser, senior fellow at the Council on Foreign Relations and former US Treasury official, said:
“These are huge, market-moving numbers. They showed beyond any reasonable doubt that China’s massive trade surplus once again flows through the balance sheet of its core state financial institutions.”
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Why China Can’t Quit the Dollar
Chinese exporters are selling dollars for yuan, expecting appreciation. To offset that pressure on China dollar reserves and the yuan, state banks have to absorb enormous foreign exchange volumes. The $100 billion December purchase set a new record for intervention.
The BRICS dollar strategy runs into a wall here. China runs a current account surplus estimated above $1 trillion annually, and the dollar remains the only market deep enough to absorb it. China US Treasury buying, whether direct or through intermediaries, is the unavoidable result.
Setser was direct about it:
“China cannot easily diversify away from dollar assets if it still wants to manage its currency against the dollar by selling the renminbi to buy it. Ignore the amateur geopolitical strategists talking eloquently about the end of dollar dominance and follow the money.”
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