China began diversifying away from the US dollar in earnest in the first four months of this year, most likely by buying far more European government debt than US dollar assets, according to estimates from Standard Chartered Bank.

China’s foreign exchange reserves expanded by around $200bn in the first four months of the year, with three quarters of the new inflow invested abroad in non-US dollar assets, the bank estimated. For over six years, Beijing has continued to accumulate US government debt even as officials insisted they wanted to reduce the weighting of US dollar assets in reserves, which exceed US$3,000bn.

“It certainly appears that China’s finally following through on its policy to diversify its foreign reserve holdings away from the US dollar,” said Stephen Green, the bank’s chief China economist.