An item on CNBC to check out - citing research from ANZ
- China is heavily exposed to the US dollar
- is diversifying its reserves to reduce its dependence - into other currencies (eg. British pound, Japanese yen and euro - and other SDR basket currencies) and 'shadow' reserves'
- ongoing trade tensions with the U.S. has "increased the risk of a financial decoupling" between the two economies
- China still allocates a high share of its FX exchange reserves to the USD … but the pace of diversification into other currencies will likely quicken going forward
ps. ANZ's is not the only view on this - there is evidence that while China is cutting back on its holdings of USTs it has been increasing purchases of other US securities. It may be a little early to conclude there is a whole lot of diversification out of the US going on (its not secret US holdings have dropped over the past 15 years, but I don't think that's what ANZ is referring to)