Trump Trade War: How China’s Growth Model and Gold Strategy Challenge Dollar Dominance

At the same time, other central banks are also reducing their exposure to US Treasuries. Official reserves are increasingly shifting away from dollars toward gold.

Hedge funds have now become the largest marginal buyers of US Treasuries, often using highly leveraged trades. In response to declining demand for longer-term bonds, the US Treasury is exploring the use of stablecoins backed by short-term T-Bills.

Despite over $2 trillion in quantitative tightening (QT), the Federal Reserve’s balance sheet still holds a substantial number of long-dated Treasuries. This highlights the persistent structural stress in the U.S. debt market.

Conclusion: How China’s Economic Strategy Is Reshaping Global Finance

The surge in gold prices over the past two years reflects growing stress in the global financial system. China’s economic strategy is centred on investment-led growth, manufacturing capacity expansion, and rising gold reserves. These elements are increasingly shaping the international monetary order.

While President Trump’s trade discussions may focus on tariffs and bilateral deficits, there are deeper economic concerns at play. These include currency management, sustained trade surpluses, and the ongoing diversification of global reserves away from the U.S. dollar.

China’s evolving role in the global economy is driven by structural imbalances and highly competitive pricing in sectors like EVs and renewables. These dynamics are contributing to shifts that may challenge the long-term stability of the dollar-based monetary system.