It sure looks that way.

Chinese investors sold $21.2 billion in US assets in August alone – primarily US Treasury bonds. Meanwhile, the Chinese government has been buying gold at a steady pace.

Writing at FXEmpire, analyst Vladimir Zernov said there are two dynamics driving the Chinese to sell US assets.

The first is an effort to boost the yuan.

China's currency has struggled against the dollar of late due to softness in the Chinese economy and recently hit multi-year lows. Selling dollar-denominated assets for yuan boosts the local currency at the expense of the dollar. Zernov said, "Selling dollar-denominated assets to provide support to yuan makes perfect sense."

The second potential reason to sell US dollar-denominated assets is for further de-dollarization. In other words, the Chinese may be trying to minimize their exposure to the US currency for economic and geopolitical reasons.

From an economic standpoint, the Chinese have to be keenly aware of the US government's budget problem. The US ran a $1.7 trillion deficit in fiscal 2023 and has a national debt north of $33.5 trillion. Why would any country want to be exposed to that kind of risk?

Furthermore, the US has a long history of using the dollar's position as the reserve currency as a foreign policy hammer. By minimizing dependence on the greenback, countries can blunt America's ability to control their foreign policy decisions.