China's dumping of US treasuries and agency bonds and accumulation of gold can be understood through several factors and strategic objectives:

1. De-dollarization

  • China, along with other BRICS countries, is promoting a de-dollarization agenda aimed at reducing dependence on the US dollar for international transactions and national reserves. This helps BRICS countries minimize risks related to dollar fluctuations and the impact of US financial policies.

2. Diversify reserves

  • Accumulating gold is part of a strategy to diversify national reserves. Gold is considered a safe asset and has a more stable value during times of economic uncertainty. China is currently increasing its gold reserves to protect the economy from global fluctuations and enhance the stability of the country's financial system.

3. Reduce US treasury holdings

  • China's dumping of $74 billion in US treasuries over the past seven months shows a lack of confidence in the US's ability to pay amid growing public debt. This is also a way to reduce the financial risks associated with holding large amounts of assets denominated in US dollars.

4. Impact on the US economy

  • When China and the BRICS countries dump US treasuries, this puts pressure on the US economy, especially in the context of reduced investment demand from abroad. This investment shortfall could lead to rising interest rates and increase borrowing costs for the U.S. government, affecting public spending and economic growth.

5. BRICS long-term strategy

  • BRICS is focusing on building a financial system that is more independent and less dependent on the US dollar. The use of local currency in trade between BRICS countries and the accumulation of gold are strategic steps to achieve this goal.

Conclude

China's strategy of dumping US treasuries and accumulating gold reflects a shift in the financial strategy of this country as well as the BRICS countries to reduce dependence on the US dollar and protect the economy from global risks. This could have significant effects on the US economy and the global financial system in the future.

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