China was once the largest foreign holder of U.S. Treasuries, but it has been steadily shedding its stockpile for years, fueling fears of de-dollarization. Official data, however, may not fully capture the true size of Beijing's portfolio.

The decline began in earnest around 2021, and as recently as April 2022 China still held $1 trillion in Treasury securities. U.S. data released Friday show that figure has since been whittled down to $591 billion as of August—the lowest in 18 years and down from $700 billion a year earlier—according to the Treasury Department's Treasury International Capital data, whose historical series on major foreign holders tracks the long decline.

But those figures are collected primarily from U.S.-based custodians and broker-dealers—financial institutions that safekeep securities for investors—and the Treasury Department notes that U.S. securities held in overseas custody accounts may not be attributed to their actual owners.

That gap has long made China watchers skeptical of a wholesale dump of U.S. assets. They point to suspicious jumps in Treasury holdings elsewhere that coincide with the steep Chinese decline.

Canada's holdings soared to $465 billion in August from just $169 billion in the same month five years ago. Belgium's stockpile similarly shot up to $490.5 billion from $228 billion over the same span. The numbers become even more staggering once bonds backed by federal housing agencies—what market participants call "Agencies"—are included.

To be sure, China has been challenging the U.S. for supremacy in global finance, seeking to unseat the dollar as the world's top currency. U.S. sanctions against Russia after its 2022 invasion of Ukraine further encouraged the People's Bank of China and other central banks around the world to diversify away from dollar reserves and toward alternative assets like gold.

President Donald Trump's trade war, which has been particularly focused on China, gave Beijing additional reasons to ditch Treasuries and decouple from the U.S.

At the same time, China has relied more heavily on export-led growth in recent years as domestic demand stagnates amid the festering property crash and debt hangover. Despite the friction with the U.S and other trade partners, China posted a $1.2 trillion trade surplus in 2025—the largest in recorded history—growing three times faster than global goods trade.

This year looks to break that record: in the first nine months of 2026, China's trade surplus reached $938 billion, and expectations are growing that it could surpass last year's milestone.

Such massive surpluses must be recycled somewhere—perhaps leading China to shift its Treasury debt to non-U.S. custodian banks in other countries, so that it no longer shows up as "China" in official U.S. data.

"The evidence that China uses a Canadian custodian for some of its Agencies is especially strong — note the sudden jump in Canada's holdings and the big impact of the detailed June survey at some early points," Brad Setser, a senior fellow at the Council on Foreign Relations and a former Treasury official, wrote on X on Wednesday, while highlighting a Bloomberg story on the subject.

In May, Setser published a deep dive into China's holdings. Since about 2020, there has been a huge increase in Treasuries held in custodians in the United Kingdom, France, Luxembourg, and Belgium.

Adding China's reported holdings to those in Canada and the European custodial centers produces a total as high as $500 billion. Even an adjustment that looks only at Canada, Luxembourg, and France since about 2022 puts China's holdings at around $300 billion.

While China has reduced its stash of long-term Treasuries and increased holdings of short-term bills—debt that matures in a year or less—Setser estimated that China's total U.S. financial holdings remain between 50% and 55% of its reserve portfolio.

"Both the Treasury and the Agency portfolios need to be adjusted for the bonds that China keeps on custody in Canada and in Europe," he said. "That adds to uncertainty around the estimate, as it seems likely that China is now using multiple non-U.S. custodians to mask its true holdings."

The country attributions get revisited in Treasury's detailed benchmark surveys—the June count Setser cites among them—making future TIC releases and survey revisions the place where a fuller picture of China's true holdings would surface.

This story was originally featured on Fortune.com.