Xi's First U.S. State Visit in Over a Decade: China, the Dollar and Gold

Chinese President Xi Jinping is in Washington this week for a high-profile meeting with President Donald Trump for his first state visit to the White House in more than a decade.

Trade, tariffs, artificial intelligence, critical minerals and currencies are all part of the conversation. But there is another important story unfolding in the background.

China is buying more gold, reducing its reported holdings of U.S. Treasuries and building more ways to conduct international business without relying as heavily on the U.S. dollar.

Here are some of the biggest developments - and why they could matter to Americans.

1. China Controls Much of the World's Rare Earth Supply

China controls up to 70% of global rare-earth mining, about 85% of refining capacity and roughly 90% of rare-earth alloy and magnet production.

These materials are essential for electronics, automobiles, advanced technology and military equipment. China has also restricted some rare-earth exports during recent trade tensions, showing how control over these materials can become leverage in broader economic negotiations.

That means disruptions in Chinese supply can ripple through American manufacturing and supply chains.

And the conversation extends beyond rare earths. Silver is increasingly viewed as a critical mineral resource globally because of its role in technology, and China has also recently tightened controls around silver exports.

Gold serves a different purpose, but governments continue to hold it as a reserve asset because it is tangible and is not another government's debt.

Together, gold, silver and other critical materials are a reminder that in a world increasingly focused on supply security and financial independence, physical assets have taken on added importance.

2. China's Currency Has Been Strengthening Against the Dollar

China's currency, the yuan, recently reached its strongest level against the U.S. dollar in more than three and a half years.

In simple terms, one U.S. dollar now buys fewer yuan than it did before.

This does not mean the dollar is suddenly losing its position as the world's leading currency. Currency values move for many reasons, and analysts have cautioned against assuming the yuan's recent rise will continue indefinitely.

But currencies matter because they affect trade, prices and global investing.

They also matter to gold. Gold is generally priced in U.S. dollars, so changes in the dollar can be one of several factors influencing global gold demand and prices.

3. China Is Building More Ways to Operate Without the Dollar

This may be one of the most important long-term trends.

China and other BRICS countries are promoting more international trade and investment in local currencies. At their latest summit, BRICS leaders backed greater use of local currencies and efforts to make payment systems more connected.

China is also expanding its own yuan-based Cross-Border Interbank Payment System, known as CIPS. From January through August, CIPS processed about 139.7 trillion yuan in payments, and its network now reaches nearly 5,300 banking institutions across 192 countries and regions.

China and Hong Kong are even expanding their gold-market infrastructure, including a new gold clearing system and plans for yuan-denominated gold futures.

All in all, China is building more ways to trade, settle payments and invest without needing the dollar for every transaction.

4. China Has Dramatically Reduced Its U.S. Treasury Holdings

China's move away from U.S. debt did not start yesterday.

At the end of 2013, China held roughly $1.27 trillion in U.S. Treasury securities. Today, its reported holdings have fallen to about $618 billion - less than half that amount.

That is a major shift.

China still holds hundreds of billions of dollars in U.S. government debt, but over time it has significantly reduced that exposure while expanding the use of its own currency and adding more gold to its reserves.

And that is what makes the trend especially interesting: China is holding far less U.S. debt than it once did while steadily accumulating more physical gold.

5. China Keeps Buying More Gold

The People's Bank of China added approximately 20.2 metric tons of gold in August alone, its largest monthly purchase since October 2023.

That extended China's reported gold-buying streak to 22 consecutive months and brought its official holdings to about 2,387 metric tons. Gold now represents roughly 9% of China's reported foreign-exchange reserves.

China still owns dollars. It still owns U.S. Treasuries. And it still does enormous amounts of business connected to the dollar.

But it is also buying more gold, expanding use of the yuan and building financial systems that give it alternatives.

6. The U.S. and China Are Trying to Keep a Fragile Trade Truce From Breaking Down

The U.S. and China have extended their current trade truce through January 10, 2027, buying both sides more time to negotiate.

But the bigger economic rivalry is far from over.

Tariffs, rare earth minerals, agricultural purchases, technology and artificial intelligence are all still part of the negotiations. And because the U.S. and China are so deeply tied into global trade, another escalation could affect far more than politics.

Higher tariffs or supply restrictions can increase costs for American businesses, disrupt supply chains and eventually make some products more expensive for consumers.

That is why this week's meeting is big. The goal may be to prevent the economic relationship between the world's two largest economies from becoming even more disruptive.

What Does All of This Mean for Americans?

The U.S. dollar still occupies a central role in the global economy and remains the leading currency in global reserves, cross-border payments and international lending.

But that does not mean Americans should ignore what is changing.

China and other countries are building more ways to trade in local currencies. China is expanding its yuan-based payment network. Its reported Treasury holdings have declined. And its central bank continues to accumulate physical gold.

If major countries gradually need fewer dollars for trade and reserves, an important long-term question is what that could eventually mean for global demand for the dollar, and, in turn, its value and Americans' purchasing power.

For Americans, that may be a trend worth understanding, and another reason to consider whether their own savings are diversified across more than just dollar-based assets.

If you would like to learn more about owning physical precious metals or adding gold and silver to a retirement account, Lear Capital can explain the process and available options. Call 855-271-2873 to speak with an experienced representative.