China Sells Record Amount of Dollar Assets as US Remains 'World Bully’

China sold off a record $53.3 billion of Treasury and agency bonds in the first quarter of 2024, a move seen as part of Beijing’s drive to diversify from US dollar assets. This comes as gold's share in China's official reserves rose to 4.9% in April, the highest on record.

"It is a wise decision to diversify away from USD and to hold physical gold in your own country instead," Claudio Grass, an expert on monetary history, economics and an independent precious metals advisor based out of Switzerland, told Sputnik.

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He called US bonds "a bad investment" because "they have not worked, especially since 2022, and are guaranteed to lose money."

"Gold outperformed USD bonds by 75% since 2020. In addition, the USD has been used for decades already as a political weapon and with the arbitrary confiscation of assets due to pressure from the US government, the Chinese seem to be aware of the risk that their property could also be confiscated at any time," the expert said.

Dwelling on a common trend of countries seeking to cut Treasury holdings and buy more gold, he said that "by now it should be obvious that the US government is the world bully today."

"In addition, there is the BRICS alliance which is gaining track and challenging the current world order. Also, emerging markets are buying up the gold because of these geopolitical changes and uncertainties. On top of it, they contribute today almost 50% to the world GDP vs only 19% in the year 2000; there is more capital available to exchange for physical gold," according to the expert.

Asked how the latest developments could affect the greenback on the global markets, Grass argued that "it will lead to the collapse of the USD and the current system."

"It is obvious that the Western civilization is being destroyed by their own corrupted and rotten political system and its rulers. The renewed politically enforced separation of the East and the West will lead to turmoil and chaos," he added.

He recalled that history shows that mankind has had "a major global economic crisis and major wars every 80 years." Per Grass, the global community currently is "in the transit period and we don’t know yet what will come out of it. Physical gold, however, will shine and protect the people who own it."

Bloomberg News earlier reported that China selling off Treasury bonds is "garnering renewed investor attention amid signs that tensions between the world’s largest economies may worsen."

This comes as Beijing vowed to retaliate against the Biden administration’s tough new levies on a wide array of Chinese-made goods, ranging from semiconductors and solar power cells to electric cars - the latest move in the escalating trade war between China and the US.

The PRC’s Commerce Ministry warned that it would "take resolute measures to safeguard its own rights and interests" in response to the US’s 25-100% tariff hikes, accusing Washington of turning economic and trade issues into an instrument of "domestic political considerations."

The warning followed the White House accusing China of "non-market policies and practices" resulting in "growing overcapacity and export surges that threaten to significantly harm American workers, businesses and communities."

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The developments were preceded by a spate of restrictive measures imposed on China by the Trump administration after it launched a trade war with Beijing in 2018, with Team Biden declining to roll back any of the restrictions put in place by its predecessors. China responded to the Trump-era measures with tit-for-tat restrictions on American exports, ranging from food goods to major American brand name products like Harley Davidson motorcycles and Jack Daniels whiskey.

In stark contrast, Beijing continues to deepen a comprehensive partnership and strategic interaction with Moscow, which was confirmed during Russian President Vladimir Putin’s recent talks with Chinese counterpart Xi Jinping as part of his two-day visit to China earlier this week.

Speaking at the opening ceremony of the eighth Russian-Chinese Expo and the fourth forum of inter-regional cooperation in Harbin on Friday, Putin underscored that Moscow supports Beijing’s intention to localize production on Russian soil and is ready to provide Chinese investors with privileges.

"Large-scale joint projects are also being implemented in the field of industrial cooperation, Chinese automakers are actively entering the Russian market... I would like to emphasize that Russia not only welcomes the attitude of Chinese business to localize production on our territory, but is ready to provide investors from China with economic benefits, assistance and support, as well as access to a unique Russian technological base, our highly qualified personnel," Putin said.

He added that the Russian-Chinese "indissoluble partnership directly contributes to the growth of the economies of both countries, reliably ensures energy security, stimulates the creation of new industries and high-paying jobs, as well as improves the well-being and quality of life of our citizens."

China Sells Off Record Amount of Dollar Assets as US Remains the 'World's Bully’