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Fri Sep 4, 2020, 11:33 AM

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.

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Reply China may dump U.S. Treasuries as Sino-U.S. tensions flare - Global Times (Original post)
honest.abe Sep 4 OP
yaesu Sep 4 #1
OAITW r.2.0 Sep 4 #2
Miguelito Loveless Sep 4 #3
aggiesal Sep 4 #9
beachbumbob Sep 4 #17
Lonestarblue Sep 4 #19
OAITW r.2.0 Sep 4 #20
getagrip_already Sep 4 #4
bluestarone Sep 4 #7
Evolve Dammit Sep 4 #5
NCjack Sep 4 #6
SWBTATTReg Sep 4 #8
Escurumbele Sep 4 #12
SWBTATTReg Sep 4 #13
TrogL Sep 4 #10
ashredux Sep 4 #16
keithbvadu2 Sep 4 #11
ashredux Sep 4 #15
ashredux Sep 4 #14
marie999 Sep 4 #18
roamer65 Sep 4 #22
roamer65 Sep 4 #21

Response to honest.abe (Original post)

Fri Sep 4, 2020, 11:37 AM

1. China, I dare you! I double dog dare you!

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Response to honest.abe (Original post)

Fri Sep 4, 2020, 11:40 AM

2. Well, if they dumped their entire portfolio of Treasuries, they'd wreck the USD.

But they'd lose their shirts as well. Really, no winners if they do it, but that's the present reality,

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Response to OAITW r.2.0 (Reply #2)

Fri Sep 4, 2020, 11:45 AM

3. True,

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.

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Response to OAITW r.2.0 (Reply #2)

Fri Sep 4, 2020, 11:59 AM

9. The Russians would follow by dumping their's ...

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.

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Response to OAITW r.2.0 (Reply #2)

Fri Sep 4, 2020, 12:46 PM

17. chinese will survive, US not so much, this is coming sooner than later and be based around

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

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Response to OAITW r.2.0 (Reply #2)

Fri Sep 4, 2020, 01:36 PM

19. Not necessarily.

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.

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Response to Lonestarblue (Reply #19)

Fri Sep 4, 2020, 01:42 PM

20. Good point. n t

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Response to honest.abe (Original post)

Fri Sep 4, 2020, 11:46 AM

4. all part of putins plan.... destabilize the dollar and knock it off as international standard

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.

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Response to getagrip_already (Reply #4)

Fri Sep 4, 2020, 11:50 AM

7. RIGHT!

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!!!

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Response to honest.abe (Original post)

Fri Sep 4, 2020, 11:48 AM

5. All the "chaos" by Orange julius has the world and and U.S. on brink. He must be thrilled

Didn't his mother say "What have I raised?" at some point?

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Response to honest.abe (Original post)

Fri Sep 4, 2020, 11:49 AM

6. What? If they do that soon, it could shift votes away from TRE45ON.

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Response to honest.abe (Original post)

Fri Sep 4, 2020, 11:55 AM

8. I thought that they (the Chinese) have already been cutting their exposure to these US bonds and ...

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?

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Response to SWBTATTReg (Reply #8)

Fri Sep 4, 2020, 12:20 PM

12. On the same token, why would republicans start the rumors? It doesn't help their cause.

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.

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Response to Escurumbele (Reply #12)

Fri Sep 4, 2020, 12:24 PM

13. I disagree. Everything is interconnected in this world, far more than a lot of people realize.

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Response to honest.abe (Original post)

Fri Sep 4, 2020, 12:11 PM

10. I'd like to put this mildly but....EVERYBODY PANIC!!!

Iíve been waiting for this.

China owns a lot of US paper (eg bonds). If they start calling in their markers itís going to severely disrupt an already unstable global market.

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Response to TrogL (Reply #10)

Fri Sep 4, 2020, 12:34 PM

16. There is no "Call" provisions...they would have to sell in the open market...

Prices go down...interest rate goes up....

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Response to honest.abe (Original post)

Fri Sep 4, 2020, 12:17 PM

11. Donald mentioned reneging on the debt during his campaign.

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.

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Response to keithbvadu2 (Reply #11)

Fri Sep 4, 2020, 12:32 PM

15. That would be BEYOND DISASTROUS!

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Response to honest.abe (Original post)

Fri Sep 4, 2020, 12:32 PM

14. First, they will not "dump" all US Treasures...but they can cause some market havoc

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Response to honest.abe (Original post)

Fri Sep 4, 2020, 01:20 PM

18. How would this affect Social Security Trust Fund and Federal Disabilities Insurance Trust Fund

which owns almost $3 trillion.

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Response to marie999 (Reply #18)

Fri Sep 4, 2020, 05:34 PM

22. Zero.

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.

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Response to honest.abe (Original post)

Fri Sep 4, 2020, 05:31 PM

21. The Federal Reserve will monetize all of it.

YoY...M1 money supply is up 40 percent.

The Chinese arenít looking to sell as retaliation. They are looking to get out of the dollar before it crashes.

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