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As global use of yuan expands, questions resurface about China’s world-leading forex reserves

A report from a leading Beijing university has revived discussions about the “optimal size” of China’s foreign exchange reserves – with a focus on US Treasuries – calling for its world-leading forex holdings to be trimmed to a “moderately ample” level amid the drive to promote further international use of the yuan. The report, written by Sun Jiaqi from Renmin University’s International Monetary Institute and issued on Friday, examined possible ways forward and their implications for China, which...

Mar 22, 2026 &03002222202631; 14:00 UTC www.scmp.com Trending 4/5

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Neutral impact

Sentiment score: 0/100

Moderate impact Short-term (days)

WHAT THIS MEANS

A report from Renmin University's International Monetary Institute suggests China should reduce its massive foreign exchange reserves, particularly in US Treasuries, to a 'moderately ample' level to support the global expansion of the yuan. This could lead to potential sales of US assets, impacting global bond markets and currency values, but it remains uncertain if this will materialize given ongoing geopolitical tensions. Overall, this discussion highlights China's strategic shift towards yuan internationalization amid efforts to diversify away from dollar dominance.

AI CONFIDENCE

50% Moderate

SENTIMENT GAUGE

NEWS POWER SCORE

AFFECTED ASSETS

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Euro / US Dollar

EURUSDCurrency

High volatility expected

The report's call for China to trim US Treasury holdings could weaken the US dollar if sales occur, leading to volatility in EURUSD as investors reassess currency strengths, though this is speculative and may already be priced into markets.

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10-Year Treasury Yield

^TNXBond

Expected to rise

If China reduces its US Treasury holdings, it might increase yields on US bonds due to higher supply, but macro headwinds like global economic slowdowns could offset this effect.

PRICE HISTORY

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⚡ SUGGESTED ACTION

Monitor US Treasury yields and major forex pairs like EURUSD for short-term volatility; consider protective hedges or wait for official policy announcements before making trades, as the market may have already anticipated such discussions.

KEY SIGNALS

Potential reduction in China's US Treasury holdingsIncreased push for yuan internationalization

SECTORS INVOLVED

ForexBonds

Analysis generated on Mar 22, 2026 at 19:41 UTC

Disclaimer: This analysis is generated by artificial intelligence for informational purposes only and does not constitute financial advice, investment recommendation, or solicitation. Original reporting by SCMP Business. Always conduct your own research and consult a qualified financial advisor before making investment decisions.

As global use of yuan expands, questions resurface about China’s world-leading forex reserves

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