Through the end of August – the most recent data period – China's net position in U.S. Treasuries grew $3.5 billion since the start of 2017. The in-between period saw that position rise as much as $25.7 billion (September 2017) and fall as much as $14.7 billion (July 2018). In August, the People's Bank of China added $9.4 billion in Treasuries after decreasing its position by $8.7 billion and $5.9 billion in June and July, respectively.
The stark turnaround comes as the threat of a tit-for-tat trade war between China and the U.S. inches closer to reality. One reason for holding such a large cache of the highest-grade USD-based securities would be to offset any devaluation to its own yuan should U.S. demand for Chinese-made goods decline. The other reason is more strategic: If China were to sell a material position in the $1.2 trillion of Treasuries it holds, the flood would crush bond valuations and drive up interest rates. About 99% of the Treasuries held by China are long-term securities.