China May Secretly Hold Nearly $600 Billion in U.S. Treasuries Through Canadian Accounts
nashnova research
Wall Street is circulating a striking inference: China never truly cut its Treasury holdings — it moved them to Canadian custodian banks, creating a paper illusion of dollar exit. If confirmed, this would fundamentally reshape the market's read on China's real role in the Treasury market.
Where does this inference come from?
Vitaliy Liberman, a mortgage-debt specialist at DoubleLine, found that Canada's holdings of U.S. Treasuries and federal-agency-backed bonds quadrupled in five years, reaching nearly $600 billion.
This means → Canada is boycotting American goods in a trade war while massively buying American debt — the math doesn't add up.
Liberman checked with veteran Wall Street contacts. The answer was strikingly uniform: "That's not Canada — that's 'the other Canada'" — meaning China.
What do the official numbers say?
U.S. Treasury data show China has steadily trimmed its holdings since around 2016, now at roughly $618 billion — nearly half its peak.
Its federal-agency mortgage-backed holdings have also dropped close to 50% since early 2024.
In plain terms = on paper, China is indeed "selling America" — but multiple analysts believe the data systematically understate China's actual exposure.
How do the holdings "disappear"?
The mechanism: China moves Treasuries from U.S.-based custodians to custodian banks in third countries such as Canada.
This means → those holdings are no longer recorded under China's name — they show up under the custodian's home country, and statistically "vanish."
Brad Setser, a former U.S. Treasury official, put it this way: "China has been far better at hiding dollar assets than at actually getting rid of them."
Why can't China walk away?
China runs a trade surplus exceeding $1 trillion. Exporters continuously accumulate dollar revenues.
Converting massively into yuan → pushes the yuan higher → hurts export competitiveness. Dumping Treasuries outright → drives down the value of its own portfolio → the more it sells, the more it loses.
In plain terms = Setser calls it "China held hostage by its own success" — its manufacturing dominance and massive surplus make a clean exit from dollar assets nearly impossible.
Has this happened before?
In 2014, Belgium's Treasury holdings surged over 40% in five months. The market widely attributed that spike to China as well.
This reflects a pattern: routing holdings through third-country custodians may be a long-standing Chinese practice, not a new tactic.
For now, China's State Administration of Foreign Exchange declined to comment, Canada's financial regulator said it does not discuss client activity, and the U.S. Treasury did not respond — no direct evidence exists, and the inference remains high-level market speculation.
市场有风险，内容仅供研究参考，不构成投资建议。