- 25 Aug 2023 09:50
#15284161
China is beginning to sell off the U.S. Treasury bonds they own. The significance of this is that it is ultimately going to make it more difficult for the U.S. to continue to maintain its debt and will increase inflation of the U.S. dollar.
China's ownership of U.S. Treasury debt reached a peak in August 2017 of 1.2 trillion dollars.
But now, as of August 2023, China's ownership of U.S. debt has hit a 14-year low of 835 billion. (That's 69% of the peak)
China has been slowly selling off U.S. Treasury debt. It's believed the reason China is doing this is because of their recent economic slump. China is trying to prop up the yuan, to stabilize it. Historically China kept their own currency weaker by buying U.S. bonds, in order to help promote exports, but the situation now appears to have reversed.
But with China selling off U.S. Treasury debt, it's going to flood the marketplace and then the world will not be buying more debt that the U.S. Treasury is selling. This is going to make it more difficult and expensive for the U.S. to continue to service their debt.
This is all part of the so-called "run on the dollar", with other countries around the world beginning to dump the dollar due to the high rates of inflation. Which will contribute to even more inflation when there is less international demand for the dollar.
The American public has been warned about this before, that it's dangerous for China to hold so much of the U.S. debt. If China suddenly dumped a large portion of it, it could cause shockwaves in the market.
Beijing selling off US Treasurys is a sign of China's economic weakness as it tries to prop up the yuan, Matthew Fox, August 25, 2023, Business Insider - India
China's ownership of U.S. Treasury debt reached a peak in August 2017 of 1.2 trillion dollars.
But now, as of August 2023, China's ownership of U.S. debt has hit a 14-year low of 835 billion. (That's 69% of the peak)
China has been slowly selling off U.S. Treasury debt. It's believed the reason China is doing this is because of their recent economic slump. China is trying to prop up the yuan, to stabilize it. Historically China kept their own currency weaker by buying U.S. bonds, in order to help promote exports, but the situation now appears to have reversed.
But with China selling off U.S. Treasury debt, it's going to flood the marketplace and then the world will not be buying more debt that the U.S. Treasury is selling. This is going to make it more difficult and expensive for the U.S. to continue to service their debt.
This is all part of the so-called "run on the dollar", with other countries around the world beginning to dump the dollar due to the high rates of inflation. Which will contribute to even more inflation when there is less international demand for the dollar.
The American public has been warned about this before, that it's dangerous for China to hold so much of the U.S. debt. If China suddenly dumped a large portion of it, it could cause shockwaves in the market.
Beijing selling off US Treasurys is a sign of China's economic weakness as it tries to prop up the yuan, Matthew Fox, August 25, 2023, Business Insider - India