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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 int
by 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 agoChina 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.