Since last week after a dismal 10-year Treasury auction, there has been renewed speculation whether China may sell its U.S. debt in retaliation for increased tariffs on $200 billion of its exports to the United States.
The latest data on China's U.S. bond holding were collected before a sudden breakdown in trade talks between the world's two biggest economic powers 1-1/2 weeks ago and prior to the U.S. duty hike on Chinese goods, which went into effect on Friday.
China sold $20.45 billion in Treasuries in March, the most since October 2016, following $1.08 billion in purchases the month before.
China's stake in Treasuries fell for the first time in four months to $1.121 trillion in March, which was the lowest since May 2017 when it was $1.102 trillion. It was $1.131 trillion in February, the data showed.
"The decline this month brings China essentially flat to where they were in February, erasing the increases from December through February," Jefferies LLC's senior money market economist Tom Simons wrote in a research note.