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> China owns more than 1 trillion of US debt. In the past the country bought a massive amount of US debt to inflate USD vs RMB and boost their own economy...If
by vijayr02 6y ago
> China owns more than 1 trillion of US debt. In the past the country bought a massive amount of US debt to inflate USD vs RMB and boost their own economy...If the US blocks them they may start massively selling US debt, which would impact USD and the US economy.
I think you have this backwards. China bought US treasuries to weaken their currency and increase demand for their goods. If they now sell, they will face significant appreciation of the yuan and become uncompetitive. At the same time the US would become more competitive. There would be short term disruption but China would suffer more.
- dgellow 6y agoThat’s what I mean, yes. I don’t see the difference between my comment and yours. I was answering to someone talking about cutting China off the US market (or at minimum adding strong restrictions). In that situation China’s economy is already suffering.
- vijayr02 6y agoApologies if I misinterpreted your comment, but I understood your second point as a risk primarily to the US. My response was that such an act by China would actually help the US economy, not hurt it (while simultaneously hurting China).