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CFR senior fellow Brad Setser's calculations indicate China's total dollar…

2026-05-10 · 07:38 UTC ·@ulrichspeck ·2 min read

Brief

China is publicly claiming it is exiting the dollar, but a CFR analysis (Brad Setser) shows Beijing’s state entities likely hold over $4 trillion in dollar assets—more off official books than the ~$1.8 trillion shown in SAFE’s $3.3 trillion reserves. Policy banks, state commercial banks, and the China Investment Corporation retain dollar exposures and continue dollar lending (e.g., Zambia, Sri Lanka, Ecuador, Angola).

Why it matters

CFR senior fellow Brad Setser's calculations indicate China's total dollar holdings across state entities likely exceed $4 trillion—surpassing the roughly $1.8 trillion in dollars reported inside SAFE's official $3.3 trillion reserves.

Key details

  • SAFE's reported dollar share fell from 79% in 2005 to 55% in 2019 while official reserves have been stagnant at about $3.3 trillion for eight years; new foreign assets were routed to off‑book entities instead.
  • Chinese state commercial banks (~$1 trillion), policy banks (close to $1 trillion), and the China Investment Corporation (~$450 billion) hold large dollar assets and continue to extend dollar‑denominated loans (examples: Zambia, Sri Lanka, Ecuador, Angola), making 'de‑dollarization' primarily a geopolitical press release.
Source evidence

"China is telling the world it is exiting the dollar while quietly holding more of it than ever. That is not de-dollarization but a very well-executed press release."

UnveiledChina (@Unveiled_ChinaX)

China has been telling the world it is abandoning the dollar. The Council on Foreign Relations just published a detailed analysis showing that China may actually hold more dollars off its official books than on them. The de-dollarization story is largely a magic trick.

Here is how it works in plain terms. China's official foreign exchange reserve, managed by an agency called SAFE, used to hold about 79% of its assets in US dollars back in 2005. By 2019, that number had dropped to 55%. That is the number that gets reported. That is the number that generates headlines about China dumping the dollar.

But while China was reducing the dollar share of its official reserves, it quietly stopped growing those official reserves altogether. They have been stuck at roughly $3.3 trillion for eight years. All the new money China accumulated went somewhere else entirely, into the foreign lending of state-owned policy banks like the China Development Bank, into the foreign assets of state commercial banks, and into various state investment funds. None of this is fully disclosed. None of it shows up in the headline de-dollarization numbers.

CFR senior fellow Brad Setser ran the math. China's official reserves hold approximately $1.8 trillion in dollars. But Chinese state commercial banks hold an estimated $1 trillion in dollar assets abroad. The policy banks hold close to another $1 trillion in foreign claims, most denominated in dollars. The China Investment Corporation, the country's sovereign wealth fund, holds roughly $450 billion in foreign assets, the majority in dollars. Add it all up and China's total dollar holdings across all state entities likely exceed $4 trillion, more off the official books than on them.

Every debt restructuring case where China's policy banks were involved, Zambia, Sri Lanka, Ecuador, Angola, involved dollar-denominated loans. Not yuan. Not euros. Dollars.

The de-dollarization narrative serves a specific purpose for Beijing. It signals geopolitical independence from the US financial system, which is valuable messaging for domestic audiences and Global South partners. But the actual financial behavior of Chinese state entities tells a different story. China's banks are still borrowing and lending predominantly in dollars. China's investment funds are still holding predominantly dollar assets. The label changed. The exposure did not.

China is telling the world it is exiting the dollar while quietly holding more of it than ever. That is not de-dollarization but a very well-executed press release.

China #CCP #Dollar #DeDollarization #Geopolitics #Finance #CFR #Economy #GlobalFinance #SAFE

— https://nitter.net/Unveiled_ChinaX/status/2053279823003566575#m