China's holdings of U.S. Treasury bonds have fallen to their lowest level since 2009, with the "offshore renminbi" becoming the new focus?

In recent years, the global economic landscape has been undergoing profound changes, especially under the tension of US-China trade relations, where the fiscal policies and monetary strategies of various countries have garnered attention. According to recent data released by the US Treasury, the scale of US Treasury bonds held by China has dropped to a new low since 2009, decreasing by nearly 1 billion dollars compared to the figures reported in April. Although this data may seem minor, it has sparked speculation in the market about a new direction for China's fiscal policy. Against this backdrop, the domestic Blockchain project Conflux announced its participation in the issuance of "offshore renminbi" stablecoins, raising the question of whether the "offshore renminbi" will become the new focal point in the global financial market.

China Reduces Holdings in US Treasury Bonds: Strategic Adjustment and Risk Diversification

The trade policy of the Trump administration has not only damaged the global reputation of U.S. debt but has also directly affected major holders of U.S. Treasury bonds like China. While some analysts may not see the recent reduction of U.S. Treasury holdings by China as a significant decline, others believe it signifies a new direction in China’s policy towards purchasing U.S. foreign debt. Especially if trade negotiations fail, China will face the risk of retaliation, making diversification of investments inevitable.

In March of this year, China reduced its holdings of U.S. Treasury bonds by nearly $19 billion, ranking third among U.S. Treasury bond holders after Japan and the United Kingdom. In April, China sold another $8.2 billion of U.S. Treasury bonds. Despite the ongoing sell-offs and trade tensions between the two countries, China still holds $756.3 billion in U.S. securities, which contradicts the theory that the Chinese government is weaponizing these assets.

Nevertheless, these reduction measures echo the recommendations of Chinese analysts to diversify investments, shifting from these potentially risky assets to less problematic commodities, including gold and other metals as safe-haven assets. This shows that China is adopting a more cautious and diversified strategy in asset allocation.

Global Bondholders Adjust: Trust Issues Regarding US Debt

The measures taken by the U.S. government have prompted global bondholders to adjust their exposures, leading international investors to replace local buyers. In 2008, foreign buyers held 57% of U.S. Treasury issuance, while today that figure has dropped to 32%, indicating a potential trust issue regarding the current government’s ability to handle the escalating debt crisis.

In this macro context, countries are seeking more robust and autonomous financial solutions. Digital currencies, especially stablecoins, are becoming one of the important options.

The Rise of Conflux Tree Graph Public Chain: The Pioneer of the "Offshore Renminbi" Stablecoin

While China reduces its holdings of U.S. Treasury bonds, exciting news has emerged from domestic blockchain projects in China. Conflux, which claims to be the only public blockchain in China compliant with regulatory requirements, has seen its native token CFX soar by 115% in the past 24 hours, briefly touching 24 cents, marking its highest level since December.

This explosive initiative is driven by two key factors: the announcement of a new offshore renminbi-pegged stablecoin and the upcoming launch of Conflux 3.0 (a significant protocol upgrade). Both developments were announced at a weekend event in Shanghai and reported by official media, adding legitimacy and follow to the project.

The 24-hour trading volume of CFX has surged to over $1.7 billion, a significant increase from less than $60 million two days ago, indicating a resurgence of speculative interest and capital inflows from Asian traders. Currently, the market capitalization of CFX has surpassed $1.09 billion, placing CFX back among the top 120 tokens by market cap.

According to reports, Conflux announced that it is collaborating with fintech company AnchorX and Shenzhen-listed Dongxin Pinghe Technology to issue a stablecoin pegged to the offshore renminbi, specifically targeting the cross-border "Belt and Road" initiative (BRI) corridor. Conflux 3.0 was also announced at this event, expected to launch in August, with a throughput of up to 15,000 transactions per second (TPS), and supporting large-scale cross-border settlements and the issuance of real-world assets.

Strategic Layout of China's Blockchain: Compliance and Internationalization

This is not the first time Conflux has surged due to China-related promotions. Conflux is often referred to as "China's Ethereum" by Crypto Twitter, and it previously skyrocketed due to headlines about its collaboration with China Telecom to develop blockchain SIM cards. The network has also partnered with McDonald's China and the Shanghai Municipal Government to launch Web3 and metaverse pilot projects, positioning itself as a compliant, localized alternative to Western blockchains.

Conflux's layout on the "offshore RMB" stablecoin is not only a technological breakthrough but also a strategic attempt by China in the field of digital currency. While strictly regulating domestic cryptocurrencies, China is exploring the possibility of promoting the digitization of the RMB in the international market through compliant Blockchain projects, particularly by utilizing the "Belt and Road" initiative to apply RMB stablecoins in cross-border trade and settlement, which will open new paths for the internationalization of the RMB.

Conclusion:

China's reduction of U.S. Treasury holdings, along with Conflux's proactive layout in "offshore RMB" stablecoin, together depict a picture of the global financial landscape quietly changing. Against the backdrop of pursuing asset diversification and financial autonomy, digital currencies, especially stablecoins pegged to fiat currencies, are becoming an important battleground for countries vying for future financial dominance. The case of Conflux shows that China is attempting to promote the internationalization of the RMB through blockchain technology within a compliance framework. This will not only bring new development opportunities for the "offshore RMB" but also have a profound impact on the global stablecoin market.