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China's ascension to being a significant holder of U.S. Treasury securities can be traced back to its rapid economic growth, where it transformed into a global manufacturing hub. As it exported more goods than it imported, China accumulated a considerable amount of U.S. dollars. Consequently, the People’s Bank of China (PBoC) began investing these reserves, significantly increasing its holdings of U.S. Treasury securities from $70 billion in 2000 to more than $700 billion by 2008. By 2013, China peaked at holding about $1.3 trillion in U.S. debt.
The Shift: Reasons Behind China's Reduction in Treasury Holdings
China's current divestment from U.S. Treasuries can be attributed to multiple factors: