Reports that Chinese regulators have instructed banks to curb exposure to US Treasuries have prompted the usual speculation about a financial decoupling in recent days, a note by Capital Economics says.

According to the UK-based independent economic research and consultancy firm in referring to US Treasury figures, China’s official holdings of US government debt have been falling for years: a fact confirmed several times in recent weeks by Bne IntelliNews.

At present, China’s holdings of US T-bonds are down by roughly half from their 2013 peak, and while it is correct that the long, steady retreat predates President Donald Trump’s second stint in the White House, this has been much more noticeable of late. And, contrary to the Capital Economics take on the issue, this does at least appear to be part of a loss of faith in the dollar altogether by the world's second largest economy.

As such, while there exists the claim that this is merely a part of normal rebalancing of foreign exchange reserves by Beijing rather than a sudden shift away from the dollar, it is undeniable that in just the past few months China has influenced at least three countries in Africa to either convert or consider converting their own China-linked loans into the yuan to help save on interest payments In addition, one more has now joined China's Cross-Border Interbank Payment System (CIPS) - an increasingly prominent competitor to the SWIFT system preferred in the West.

In October 2025, Kenya switched up to $3.5bn of China-linked infrastructure loans from US dollar-denominated debt into yuan-denominated debt. This move was backed by the Chinese Export-Import Bank and is one of the clearest recent cases to date of a Global South government re-denominating major infrastructure financing into the yuan and away from the dollar.

Around the same time and also in East Africa, Ethiopia began its own talks to convert at least a portion of its $5.38bn dollar loans into the yuan according to Bloomberg. To date Addis Ababa has undertaken debt restructuring talks and negotiated maturity extensions with Chinese lenders in what would be a major global financial story if fully realised.

Even the continent’s largest economy is starting to look at altering its dealings with China; evidenced by South Africa’s Standard Bank – Africa’s largest - integrating with China’s CIPS yuan payments system. In doing so it allows companies in South Africa to pay Chinese suppliers using the yuan rather than routing transactions through US dollar-based systems linked to SWIFT.

In Europe meanwhile, China and multiple European central banks have renewed local currency swap deals of late. Most noticeably, in September 2025, the People’s Bank of China (PBC) renewed and extended for three more years a bilateral yuan-denominated currency swap agreement with the ECB, who stated in a release that the “swap arrangement has (a) maximum size of CNY350bn and €45bn”. These local currency swap lines were also initially put in place to help support trade settlement and liquidity dealings without the need to rely on the dollar, thus allowing Europe's banks and corporations to access the yuan and the euro directly for trade and investment while bypassing traditional dollar-based channels.

Closer to home for China, Beijing and Seoul again renewed their bilateral yuan swap facilities in November 2025. As South Korea’s Ministry of Finance and Economy said at the time, “the renewed agreement maintains the same scale - CNY400bn (KRW70 trillion)” - in an agreement once more seen as enabling businesses in both countries to using local currencies, the yuan and the won in carrying out trade and financial transactions

Elsewhere in the world, the story is the same. Kazakhstan’s exchange recently showed a sharp increase in trade settlements using the yuan instead of the US dollar from late last year onwards - a clear indication that local exporters and importers preferred to use the Chinese yuan when dealing with Chinese firms.

These factors should not be ignored when talk of T-bonds comes to the fore.

As is reported widely, there has been a more noticeable shift since late 2024 in Chinese sales of US Treasuries, and the dollar share of Chinese banks’ foreign bond portfolios has declined considerably. But to claim that Treasury International Capital (TIC), the reporting system administered by the US Treasury to track foreign holdings of US Treasuries can be interpreted as meaning that much of the selling by Beijing was the result of sustained pressure on the yuan last year which in knock-on effect forced the PBC to lean against depreciation by offloading short-term Treasuries, is questionable at best.

Added to this, the claim that a disorderly sell-off would damage China’s own reserves and risk financial contagion, while not incorrect, ignores the bigger picture seen across Africa, as well as Central and Eastern Asia. That picture is one of Beijing, albeit slowly, moving away from dollar denominated transactions across the world. The selling off of US Treasuries is just one part of this.

To this end, Chinese banks trimming their dollar bond holdings, whilst not constituting an outright 'dollar dump' - yet - must still be seen as evidence of a slow-moving decoupling from the US currency. Beijing never acts in haste and is not doing so now.

The latest guidance to Chinese banks therefore looks less like an immediate acceleration of divestment and more a part of a long-term and deliberate policy in which the downward slide of US debt holdings will continue - and a future clash with the White House may be the result.