As per Deutsche Bank AG, Chinese investors have been paring back their holdings of U.S. Treasuries and boosting allocations to European debt, a move driven by escalating trade tensions with the United States under President Donald Trump.
The bank stated that this shift is part of a broader trend among Chinese clients who are increasingly diversifying their portfolios away from the U.S. dollar as uncertainty grows.
With continued market turbulence and U.S. assets losing some of their traditional safe-haven appeal, Chinese investors are reconsidering their overseas strategies. Many are now favoring high-grade European bonds, Japanese government bonds, and gold, as they seek alternatives to Treasuries.
The focus on China’s position as the second-largest holder of U.S. Treasuries has heightened as market watchers scrutinize recent selloffs and examine whether foreign investors are trimming their exposure to these assets.
Lillian Tao, head of China macro and global emerging market sales, noted that despite current Treasury yields being seen as attractive following recent declines, investors remain wary of potential policy shifts out of Washington, weighing whether the market has truly stabilized.
As volatility persists, an increasing number of Chinese clients are exploring options in German government bonds and other European markets—such as Spain and Italy—that previously received far less attention.
Market sentiment has been buoyed in part by Germany’s recent approval of a major spending initiative and the prospect of further interest rate reductions from the European Central Bank (ECB).
This changing investment landscape reflects a strategic rethink among Chinese institutions, who are reassessing risk and return opportunities across global markets in response to heightened macroeconomic uncertainty.
