Wall Street on alert over reports China is preparing $1 trillion 'sell-off' of US stocks

An incredible psychological war has been raging across international markets over the last 24 hours, fueled by reports that China is preparing a historic blow to the US through a massive sell-off of American stocks valued at $1 trillion. While the figures provoke significant anxiety, data suggests there is currently no evidence of such an imminent event.

China's historic trade surplus of over $1 trillion recorded through November 2025 and its gradual reduction of US Treasury bonds are considered part of a long-term capital reallocation strategy rather than a sudden liquidation. These strategic moves reveal that Beijing seeks to control the pace of change rather than reacting impulsively to short-term market pressures. This marks a crucial distinction for international markets: while the numbers are alarming, the substance of the actions indicates a calculated policy where long-term stability prevails over short-term disruption. Investors, therefore, must differentiate between actual strategic maneuvers and "noisy" panic scenarios.

China capitalizes on Trump's tariffs

China sees an opportunity to turn President Donald Trump's tariffs to its advantage, reshaping global trade in ways that will protect its $19 trillion economy from US pressure for the foreseeable future. According to a Reuters investigation, Beijing is exploiting the uncertainty created by Trump to integrate its vast manufacturing base into the world's largest economic blocs, including the European Union, the Gulf states, and a trans-pacific trade agreement.

The effort includes accelerating negotiations for roughly 20 trade agreements, many of which have been in development for years, despite concerns regarding China's overproduction, unequal market access, and weak domestic demand. An analysis of 100 Chinese-language articles by state-backed trade experts since 2017 shows a systematic effort by Chinese policy advisors to "reverse" US trade policy and neutralize Washington’s containment strategy. China is now putting this plan into practice; the deal reached with Canada during Prime Minister Mark Carney's visit to Beijing in January—which reduces tariffs on Chinese electric vehicles—was the first in a series of agreements aimed at diminishing US influence. "Do not interrupt your opponent when he is making a mistake," a Chinese official stated, referring to Trump's disruptive trade agenda.

What the data shows

The review, based on over 2,000 trade strategy documents approved by the Chinese Academy of Social Sciences (CASS) and Peking University, reveals that policy advisors view painful structural change as a cost worth paying for China's long-term dominance in global trade. The contents of these documents are being published for the first time. If the strategy succeeds, Beijing could overturn more than a decade of US trade policy, positioning itself at the core of a new, "Chinese-style" multilateral order, according to two Western diplomats. "The Chinese now have a golden opportunity," noted Alicia Garcia Herrero, a senior fellow at the think tank Bruegel.

Building economic blocs

The shift in China's rhetoric reflects its calculations. A year ago, Beijing invoked Mao Zedong and his ability to face the West during the Korean War. Now, as China prepares to welcome Trump in April, its diplomats are touring the globe urging trade partners to join them in favor of multilateralism and free trade. In January, China sent its top diplomat to tiny Lesotho—on which Trump had initially imposed a 50% tariff—to commit to development cooperation.

Chinese state media reported on Saturday that China will implement zero tariffs on imports from 53 African countries. At the same time, China is promoting AI-powered customs systems to its neighbors and redesigning the digital infrastructure that supports trade. These moves reinforce a goal identified in policy documents: to integrate China so deeply into global trade that its partners cannot decouple under US pressure. "In the confrontation with the US strategic competition, 'anti-decoupling' should become China's primary focus," wrote Ni Feng, a fellow at CASS’s Institute of American Studies, in 2024.

Priorities and challenges

Chinese officials are now accelerating trade talks that had previously stalled. Since 2017, China has been negotiating with countries such as Honduras, Panama, Peru, South Korea, and Switzerland. The approach also includes joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), aiming to secure a top position in sectors like digital trade and artificial intelligence.

However, China's massive trade surplus causes concern among partners who fear that Chinese manufacturers will use improved market access to export excessively cheap products while domestic demand remains weak. Experts like Wendy Cutler from the Obama administration point out that China must move from words to actions, while European diplomats describe Beijing's moves as "pure Chinese propaganda." Despite doubts, Beijing advisors continue to study how the US "weaponized" international organizations to restrict China and seek to influence global standards, from intellectual property to cross-border investments. China is already applying these lessons in deals with Southeast Asian states, focusing on AI and digital trade, while investing in infrastructure like the "Friendship Port" on the border with Vietnam, reducing waiting times by 20%, according to state media.

Long-term plan

The readjustment of the economy is a long-term process. Trump still has three years of his term remaining, and the next administration could return to creating alliances to contain China. Zhao Pu, a researcher at CASS’s Institute of American Studies, wrote in 2023 that China must "study in depth the logic of US actions within international organizations and the possible next steps to better respond to increasingly intense strategic attacks in the future."

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