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None of them. It's a constant battle. I always hear the trope that we "owe" China money because they buy bonds but the entire reason they're buying bonds is to

None of them. It's a constant battle. I always hear the trope that we "owe" China money because they buy bonds but the entire reason they're buying bonds is to keep the Renminbi weaker than the USD. Germany is a weird corner case where the entire reason for the Euro is to allow them to keep their currency artificially weak by using the rest of Europe's economy as a place to dilute their export power. The DM was getting relentlessly stronger against the USD and Sterling and when the conversion to Euros happened, major holders of DMs got absolutely hosed.

jaredtn 6y ago
China is no longer a net buyer of Treasuries. They have begun to sell off their position over the last 5 years. And the renminbi is actually quite strong lately, the Chinese government is maintaining positive interest rates and allowing corporate defaults instead of money-printing.
- selectodude 6y ago
  China has sold off a net of 40 billion worth of treasuries in the past year. Less than a percent. "Sell off" is putting it exceptionally strongly. The Yuan is still in a very managed float position. It doesn't swing by more than a percent or two over a long horizon.
RobertoG 6y ago
China buy bonds because they have a lot dollars and they have a lot of dollars because the trade deficit. What would you do with that money, buy a bond with interest or keep the cash under the mattress? You can spend them, I suppose. The article mention they doing it now with the Belt and Road program. You are right about the Euro. It's not the reason of the existence but it's the result.
- selectodude 6y ago
  China could spend them, yes. Or they could float the currency and allow places to purchase goods in their currency. Or they could allow people in the mainland to hold their own reserves of dollars and not set a fixed dollar buyback peg. The trade deficit between private corporations between the US and China doesn't need to have any bearing on the Party's dollar holdings. Saudi Arabia doesn't hold many treasuries and they receive a whole lot of dollars.

jaredtn 6y ago

China is no longer a net buyer of Treasuries. They have begun to sell off their position over the last 5 years. And the renminbi is actually quite strong lately, the Chinese government is maintaining positive interest rates and allowing corporate defaults instead of money-printing.

selectodude 6y ago
China has sold off a net of 40 billion worth of treasuries in the past year. Less than a percent. "Sell off" is putting it exceptionally strongly. The Yuan is still in a very managed float position. It doesn't swing by more than a percent or two over a long horizon.

RobertoG 6y ago

China buy bonds because they have a lot dollars and they have a lot of dollars because the trade deficit. What would you do with that money, buy a bond with interest or keep the cash under the mattress? You can spend them, I suppose. The article mention they doing it now with the Belt and Road program. You are right about the Euro. It's not the reason of the existence but it's the result.

selectodude 6y ago
China could spend them, yes. Or they could float the currency and allow places to purchase goods in their currency. Or they could allow people in the mainland to hold their own reserves of dollars and not set a fixed dollar buyback peg. The trade deficit between private corporations between the US and China doesn't need to have any bearing on the Party's dollar holdings. Saudi Arabia doesn't hold many treasuries and they receive a whole lot of dollars.