China’s holdings of U.S. Treasury securities fell to $618 billion in July, less than half their November 2013 peak of $1.3 trillion and the lowest level since August 2008, according to U.S. Treasury data. The holdings declined 2.4% from $633.4 billion in June. Beijing has reduced its exposure to dollar-denominated assets for about a decade and accelerated the shift after the United States froze Russian overseas assets following Russia’s 2022 invasion of Ukraine. China has redirected investment toward gold, government agency bonds and emerging industries, including equities linked to artificial intelligence. Its actual Treasury exposure may be higher than official data indicates because some securities could be held through custodians such as Euroclear and Clearstream. The broader retreat by foreign official investors is being partly offset by hedge funds and other private buyers, who are more sensitive to price and market conditions than central banks. Analysts say that could put upward pressure on U.S. borrowing costs, while rapid changes in investor sentiment during periods of stress could increase the risk of Treasury-market and broader financial instability. Japan, the largest holder of U.S. government debt, also reduced its holdings in July, from $1.12 trillion to $1.1 trillion.