Is China hiding its true exposure to US Treasuries? China’s Treasury holdings fell -$27 billion in August, to $591 billion, their lowest level since August 2008. At the same time, Canada’s holdings of US Treasuries jumped +$38 billion in August, to $465 billion, their 3rd-highest on record. Since the beginning of 2019, Canada’s holdings have surged +$369 billion, or +384%, while China’s have declined -$534 billion, or -48%. This divergence may partly reflect China moving its US securities to foreign custodians, making its actual exposure to American debt appear smaller and creating the impression of faster financial decoupling from the US Dollar. Meanwhile, Belgium and Luxembourg, widely believed to hold some Chinese Treasury assets through custodial accounts, increased their Treasury holdings by +$20 billion and +$6 billion in August, to all-time highs of $491 billion and $448 billion, respectively. China’s diversification away from the US Dollar may be slower than it appears.