China may dump U.S. Treasuries as Sino-U.S. tensions flare - Global Times
Source: Yahoo Finance
SHANGHAI, Sept 4 (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.
With Sino-U.S. relations deteriorating over various issues including coronavirus, trade and technology, global financial markets are increasingly worried if China would sell the U.S. government debt it holds as a weapon to counter rising U.S. pressure.
"China will gradually decrease its holdings of U.S. debt to about $800 billion under normal circumstances," Xi Junyang, a professor at the Shanghai University of Finance and Economics, was quoted as saying on Thursday, without giving a detailed timeframe.
Read more: https://finance.yahoo.com/news/china-may-dump-u-treasuries-084840501.html
China has us by the short hairs. Trump, the supposed business/economic genius, has done nothing in 4 years to solve this problem... in fact he has made it worse.
yaesu
(8,020 posts)OAITW r.2.0
(23,862 posts)But they'd lose their shirts as well. Really, no winners if they do it, but that's the present reality,
Miguelito Loveless
(4,438 posts)and I think they are smart enough to know that. The problem is that neither Trump nor Putin are. China may feel the need to remind them of that.
aggiesal
(8,864 posts)They tried to convince China back in 2008 during mortgage meltdown specifically to wreck our economy.
Paulson almost crapped his pants when the Chinese ambassador mentioned the Russian request.
I don't believe China would lose money on the bonds. They might not make as much.
They'd definitely loss money on exporting goods, so it could have a negative affect on their economy as well.
beachbumbob
(9,263 posts)eliminating the US dollar as the reserve currency.
This is an economic knockout that can happen and out of US control at the moment with trump
Lonestarblue
(9,880 posts)Suppose that China purchased 10-year Treasuries back in May of 2010. The yield at that time was 3.21%. A 10-year Treasury note pays interest at its fixed rate once every six months and pays the face value to the holder at maturity. China has been receiving interest payments on the Treasury bonds it holds, which is likely to be a mix of maturity dates. If it cashes in 10-year Treasuries now and declines to purchase new bonds, it loses nothing but decreases its total holding of US debt. And indeed current rates on Treasures are so low that there are many other investment opportunities with very little more risk.
China has a huge bargaining chip, and Trump handed it to them on a gold platter. China can simply demand payment for their matured bonds, which just adds to the US deficit. The question is how much US debt China holds that has not matured versus debt that has matured and they are declining to roll that over into new debt.
OAITW r.2.0
(23,862 posts)getagrip_already
(14,250 posts)The fed is doing this all alone though. They have issued tens of trillions of dollars in a few months.
A chinese lead halt to buying new issues will cipple our ability to borrow internationally and spike inflation as the fed needs to pay higher rates to get countries to buy.
This is the end of our economy as we know it. The only people who will profit from this are those who control real assets like oil, gas, the national power grid, national parks, military bases, roads, bridges, food, etc.
That's where the oligarch's made their billions raping the assets of the former soviet union, and a roadmap for wannabe oligarch's here.
bluestarone
(16,722 posts)SOOOOO much damage done that even if RUMP is thrown out, Joe will have a MESS to deal with and again take the blame!! RETHUGS have to pay for this BULLSHIT THIS time!! No more forgetting!!!
Evolve Dammit
(16,632 posts)Didn't his mother say "What have I raised?" at some point?
NCjack
(10,279 posts)SWBTATTReg
(21,859 posts)securities, for years. One thing people seem to not realize that why would the Chinese, in flooding the marketplace w/ these bonds and notes, would hurt their rate of return by dumping these things, thus depressing the price(s) of bonds and notes, etc.?
Doesn't make sense and this very same argument was made before (years and years ago) that they would be selling these things (but didn't) and the same argument back then was made that why would the Chinese kill their rate of return by selling off their portfolio early, incurring penalties and losses, etc.?
Why would the Chinese (along the same lines) depress the value of the US Dollar as some would seem to think (and still do), when they would get fewer US Dollars after selling their US Dollar based assets? The Chinese literally have roughly $180 billion of investment in the U.S. today (per google), remember, trade deficits?).
Again, I suspect very strongly that these stories of hysteria originate from republican sources (figures), who are trying to stir up resentment etc. of some sort. Which is totally ignorant and not well thought out, I mean, think about it, would you take a loss in the literally tens of billions of dollars (out of billions and billions in assets) just to, eh, do what? force down the value of US Dollar based assets probably for a very short interval of time to make a point of some kind?
Escurumbele
(3,340 posts)It shows how bad things are with republicans in power, which of course should be clear even without this threats.
I also think China's economy is strong enough that they can afford to do it, hurt the USA, and still come ahead.
SWBTATTReg
(21,859 posts)TrogL
(32,818 posts)Ive been waiting for this.
China owns a lot of US paper (eg bonds). If they start calling in their markers its going to severely disrupt an already unstable global market.
ashredux
(2,593 posts)Prices go down...interest rate goes up....
keithbvadu2
(36,369 posts)Donald mentioned reneging on the debt during his campaign.
That's how he runs his own businesses.
Of course much of the debt is owned by Americans.
ashredux
(2,593 posts)ashredux
(2,593 posts)marie999
(3,334 posts)which owns almost $3 trillion.
Because the Federal Reserve will buy all of the bonds when sold. That is what unlimited QE is all about.
How will it affect the purchasing power of your dollars? Immensely.
roamer65
(36,739 posts)YoY...M1 money supply is up 40 percent.
The Chinese arent looking to sell as retaliation. They are looking to get out of the dollar before it crashes.