humble3d Posted April 13 Share #1 Posted April 13 Why China won’t weaponize its US Treasuries A Chinese fire sale of US debt would torch Beijing's rising credibility and strength in global financial markets Every few years, Chinese officials send a warning shot Washington’s way, hinting that they could dump mountains of US Treasury securities to show America who is boss. This “nuclear option” has been spoken of in hushed tones for years, spooking financiers fearing chaotic and disastrous collateral fallout since at least 2009. That year, then-Chinese Premier Wen Jiabao made a public plea to US Treasury Department officials. “We have made a huge amount of loans to the United States,” Wen said then. “Of course, we are concerned about the safety of our assets. To be honest, I am a little bit worried." He urged the US “to honor its words, stay a credible nation and ensure the safety of Chinese assets.” Chinese state-run media have since periodically hinted that Beijing might go nuclear, in the financial sense. In 2011, the People’s Daily argued that Beijing should “use its 'financial weapon' to teach the US a lesson.” At that time, the flashpoint was Washington cozying up to Taiwan. In May 2019, the Global Times reminded the White House that Beijing could pull the rug out from under America’s borrowing programs. Hu Xijin, editor-in-chief of the pro-Beijing publication, wrote that “Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically.” https://asiatimes.com/2020/09/why-china-wont-weaponize-its-us-treasuries/ People also ask ? Why does China invest in US Treasuries? Key Takeaways. China invests heavily in U.S. Treasury bonds to keep its export prices lower. ... To keep its export prices low, China must keep its currency—the renminbi (RMB)—low compared to the U.S. dollar. https://www.google.com/search?client=firefox-b-1&q=Why+China+won’t+weaponize+its+US+Treasuries Will China Dump US Treasuries? SHANGHAI (Reuters) - China may gradually cut its holdings of U.S. Treasury bonds and notes, in light of rising tensions between Beijing and Washington, state-backed newspaper Global Times cited experts as saying. ... “But of course, China might sell all of its U.S. bonds in an extreme case, like a military conflict.” https://www.google.com/search?client=firefox-b-1&q=Why+China+won’t+weaponize+its+US+Treasuries China owns about $1.1 trillion in U.S. debt, or a bit more than the amount Japan owns. Whether you're an American retiree or a Chinese bank, American debt is considered a sound investment. The Chinese yuan, like the currencies of many nations, is tied to the U.S. dollar. https://www.investopedia.com/articles/investing/080615/china-owns-us-debt-how-much.asp SEE MORE: ?? ANOTHER VIEW: https://billmoyers.com/story/chinese-debt-explained/ Why does the US owe China? One reason that the Chinese and foreign governments buy so many Treasuries is that we have a big trade deficit with China: about $350 billion annually. Countries like China are willing to lend the US the money, so that we continue to buy all those imports. https://www.google.com/search?client=firefox-b-1&q=Why+China+won’t+weaponize+its+US+Treasuries What would happen if we stopped buying from China? If the rest of the world stopped buying from China today. The world economy would pretty much collapse. ... Our supply chains are very entwined with China and it would take massive investment of time, money, talent, and resources to adapt to such a big change. https://www.quora.com/What-would-happen-if-we-stopped-buying-from-China The U.S. depends heavily on China for providing the low-cost goods that enable income-constrained American consumers to make ends meet. The U.S. also depends on China to support its own exports; next to Mexico and Canada, China is America's third largest and by far its most rapidly growing major export market. https://www.industryweek.com/the-economy/article/22025438/us-needs-china-more-than-china-needs-the-us https://www.defense.gov/Explore/News/Article/Article/2364137/great-power-competition-can-involve-conflict-below-threshold-of-war/ 2 1 Link to comment
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