Official data show China is dumping more U.S. Treasury debt. But it may actually be a stealth buyer, with a big stash suspiciously piling up in Canada

China was once the top holder of U.S. Treasuries but has been shedding its massive stockpile for years, fueling fears of de-dollarization, but official data may not fully capture Beijing’s actual portfolio.

The decline began in earnest around 2021, but as recently as April 2022, China still held $1 trillion in Treasury securities. U.S. data on Friday show that’s been whittled down to just $591 billion as of August, the lowest in 18 years and down from $700 billion a year earlier.

But the data is collected primarily from U.S.-based custodians and broker-dealers, according to the Treasury Department, which adds that U.S. securities held in overseas custody accounts may not be attributed to the actual owners.

As a result, China watchers have long been skeptical of a wholesale dumping of U.S. assets, pointing to suspicious jumps in Treasury holdings elsewhere that coincide with the steep Chinese drop.

Canada’s holdings soared to $465 billion in August from just $169 billion in the same month five years ago.........

© Fortune