Delicate act of holding US Treasuries

Since the moves of the US Federal Reserve System and Treasury Department have forced the dollar to decline, US Treasury bonds should have lost their charm. So, why does China continue to buy them?

China is the fastest-growing buyer of US Treasuries, and its foreign exchange reserves increased by $199 billion last year to reach $2.85 trillion. This has sparked concerns because there already is excessive liquidity in the Chinese market.

Yet China needs to hold the US Treasuries as an important way of safeguarding its economic security, given that the international financial order is dominated by the dollar.