Some Chinese commercial banks have raised US dollar deposit rates above 3% and subsequently increased purchases of US Treasuries in recent months, sources suggest

Episodes in which onshore Chinese dollar funding becomes scarcer than offshore funding have historically produced this exact chain: commercial banks bid up dollar deposit rates to retain household and corporate FX balances, then deploy the proceeds into the most liquid dollar asset available, which is the front and belly of the Treasury curve. The tell here is the deposit rate itself, since dollar deposit pricing inside China normally tracks policy-guided ceilings rather than market clearing levels, and a move above them signals genuine dollar scarcity rather than a portfolio decision. The actors matter: Chinese state and joint-stock banks have prior form as a price-insensitive marginal buyer of Treasuries when onshore dollar liabilities rise, a pattern that has on past occasions provided a steady bid at the front end even while official reserve data showed flat or declining foreign holdings, because the purchases run through the commercial banking system rather than the reserve manager. The distinction worth drawing is between reserve-driven and bank-driven demand: the former shows up in official holdings data with a lag, the latter tends to surface first in custody and survey data and is easier to reverse if dollar funding conditions ease. The follow-ons are onshore dollar liquidity indicators, the gap between Chinese and offshore dollar deposit pricing, and whether purchase flows persist in the next rounds of cross-border holdings data. Directionally, this is a structural-bid story for the front of the Treasury curve rather than a comment on US rate policy.