Amid  growing tensions with Washington and the increasing threat of economic sanctions, China is slashing its holdings of US Treasury securities, according to US Treasury data released Wednesday. The report showed Beijing reduced its holdings from $867.1 billion in December to $859.4 billion in January.

The January reduction in holdings was over twice the $3.1 billion reduction the previous month, however it was less than the $7.1 billion cut in November.

The second biggest holder of US government debt, China has been cutting its holdings for six consecutive months, after its total holdings had fallen below the symbolic $1 trillion level in April of last year.

The reductions come as Beijing is trying to diversify its portfolio while reducing its own dependence on the dollar by promoting the use of the yuan for its international settlements amid fears of US economic sanctions. Experts have noted, the de-dollarization of international trade and the threat to the US dollar’s reserve currency status could cause a devaluation of the dollar as foreign nations release their reserves onto the market.

According to Zhang Ming, deputy director of the Department of International Finance at the Institute of Finance and Banking, in an interview with the SCMP, over the past ten years, China has reduced its holdings by 34.1%, including a 16.6% reduction in 2022 alone, according to US data.