China dumps U.S. Treasuries

China sold dollar reserves for the sixth month in a row in November, according to the latest Figures that the U.S. Treasury released this week. The monthly report shows that China had only $1.05 trillion in U.S. debt on its balance sheet in November, down $66.4 billion from a month earlier. It was also the largest one-month decline since December 2011.

China's total foreign exchange reserves have fallen from $4 trillion to about $3 trillion since 2014. Foreign exchange reserves are falling due to a flight of capital from the Chinese economy. As a result, the value of the Chinese yuan is also under pressure. In total, the rest of the world has financed $5.94 trillion of the U.S. national debt. This debt is largely held by central banks, but also by institutional investors.

The following chart shows that China is disposing of its dollar reserves on an unprecedented scale. Who is going to finance the U.S. deficits if foreign countries no longer want to do so? That's the big challenge Trump faces if he wants to realize his $1 trillion fiscal stimulus program.

China dumps dollar reserves on a large scale (Via Twitter)