Renowned economist Mohammed El-Erian has signaled a major structural shift in global finance as China’s share of the US Treasury market fell to a 15-year low, raising concerns about future demand for US debt.
Great retreat
Data shared by El-Erian shows that China’s holdings of US government bonds now represent just 7% of the total market share – a staggering drop from the peak of 28% recorded 15 years ago. Total assets have fallen to about $682.6 billion, the lowest level since 2008.
“As illustrated in these MacroMicro charts, China’s holdings of US government bonds have continued to decline,” El-Erian noted in a post on X.
He emphasized that the decline is even more pronounced against the backdrop of “steady issuance of new securities by the US government.”
Change in the interest rate on ten-year government bonds over a period of fifteen years
Based on the data from the Federal Reserve Bank of St. Louishere are the percentage changes in 10-year government bond yields as of February 12, 2026. The current 10-year government bond yield is 4.09%.
- 5 year change: The most dramatic increase, with yields more than tripling from historically low pandemic-era rates of 1.20% to 4.09%
- 10 year change: Also a substantial growth of 135%, reflecting the long-term recovery from the ultra-low interest rate environment of 2016
- 15 years of change: A more modest increase of 12.36%, as the return of 3.64% in 2011 was already relatively closer to current levels
Diversification, risk reduction
The withdrawal coincides with a broader Chinese strategy to reduce dependence on the US dollar amid rising geopolitical tensions.
With the US national debt approaching $39 trillion, Beijing has reportedly advised its domestic banks to limit their exposure to government bonds and focus instead on gold and other hard assets. China’s gold reserves have now risen for 15 consecutive months, reaching a record 2,308 tonnes.
Analysts suggest this risk reduction is a direct response to the dollar’s weaponization following the Russian asset freeze in 2022.
By reducing its stake to “a quarter of the peak of 28%,” China signals a permanent shift from its position as the main financier of US deficits.
Risks to the US economy
The alarm sounded by El-Erian focuses on who will absorb the enormous supply of new debt if traditional “anchors” such as China withdraw.
While demand from Japan and Britain remains stable, the loss of Chinese purchasing power could lead to higher borrowing costs for the US government.
If foreign demand continues to decline while the US runs a trillion-dollar trade deficit, the resulting pressure on interest rates could threaten the delicate balance of the global financial system.
Economist Peter Schiff said China’s move will mainly push the Federal Reserve to buy the bonds, creating inflationary conditions for consumers.
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Disclaimer: This content was produced in part using AI tools and was reviewed and published by Benzinga’s editorial staff.
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