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More precisely, the relationship between China and the USA is such that if it goes sour, both countries have a problem, because: - trade and investment between
by cabalamat 17y ago
More precisely, the relationship between China and the USA is such that if it goes sour, both countries have a problem, because:
- trade and investment between the 2 countries is large, and if it was halted or reduced, powerful and well-connected people in both countries would suffer
- if China sold all its US securities in a rush, it wouldn't get much money from them
- if the USA reneged on its debts, or even looked likely to, it would have to pay more to borrow money in future, and the dollar might stop being the world's reserve currency (which would also hit the USA, because people would in effect stop giving it free loans)
- any serious downturn in US/China trade would also negatively affect the reast of the world, since these are 2 of the world's 3 biggest economies (they are the 1st and 2nd countries, but drop to 2nd and 3rd if you count the EU as an economy).
So there are strong arguments for both the USA and China not to let their relationship sour.