China holdings of U.S. debt fall below $1 trillion for the first time since 2010

This is good news, since China cannot use the debt against us. Also, the China debt used to represent nearly 15% of total debt but now its down to 3% of the total. The percentage difference of course it due to the increase in US total debt, which has been going up, especially in 2020.

China holdings of U.S. debt fall below $1 trillion for the first time since 2010
https://www.cnbc.com/2022/07/18/chi...1-trillion-for-the-first-time-since-2010.html

• China’s portfolio of government debt in May dropped to $980.8 billion, according to Treasury Department data released Monday.
• It marked the first time since May 2010 that China’s holdings fell below the $1 trillion mark.

It also marked the first time since May 2010 that China’s holdings fell below the $1 trillion mark. Japan is now the leading holder of U.S. debt with $1.2 trillion.

The debt decline comes as the U.S. Federal Reserve has been raising rates to stop inflation running at its fastest rate since 1981. When rates rise on bonds, prices drop, meaning a capital loss for investors who sell the bonds ahead of maturity.

The decline in China’s share also has been attributed to Beijing working to diversify its foreign debt portfolio.

 

China has seen the worlds financial response to Russia and doesn’t want to make it easy when they do something similar. We will likely see similar divestments with investments in areas that will not be easily sanctioned.

 

They are trying to make themselves sanction proof for when they attack Taiwan.

 

It would be a hell of situation with so damned many products being exported to the west. Both sides would suffer immensely from any meaningful sanctions.

 

I don't think reducing holdings in US debt will help in that regard, but if they are planning to attack Taiwan, when they probably have a plan for the inevitable sanctions. Can the rest of the world do without Chinese imports? Probably, but there would be pain. At the same time it would be quick and easy way to make China less relevant, and I doubt China wants that.

Yes, and I doubt China thinks Taiwan is worth the economic sacrifice.

See above

 

That's why I don't see it any time soon, but I'm sure they are preparing their economy for it. China would be much harder to sanction than Russia. The world is far more dependent on China and at a certain point, the "world" won't feel they would be able to sanction them.

 

You are assuming that the the world, and by world I mean primarily Europe and the Anglosphere, would react the same way to an invasion of Taiwan that they did to Ukraine. I'm not sure that's the case.

 

Don't know about Europe, because Ukraine is in their back yard, and therefore closer to their hearts. US, in the other hand, has a military co-operation agreement with Taiwan, Israel, Australia, South Korea, Japan and Finland (added this year). That agreement is not as binding as NATO, but is till put pressure on US to do something about an invasion, and economic sanctions are always the 1st option. I think Europe will impose sanctions on China, but maybe not to the same extent as the US. IMO China does not consider Taiwan worth the damage.

 

For us to do something about a Taiwan invasion assumes that we have the capability to do something. That seems very speculative.

 

I can't disagree but I suspect that, currently, time is still in favor of preventing this from happening.

 

Of course we have the capability to impose sanctions on China and provide assistance to Taiwan, like we do with Ukraine.

 

Isn't having a prosperous capitalist economy right inside China something of a cash cow for them, like Hong Kong?

 

China is doing very well compared to only few decades ago, and I doubt they are ready to kill the goose laying the golden eggs (their ability to manufacture goods and export to the rest of the world).

 

OTOH most people thought WWI would never happen because it would hurt everyone's economy too much.

 

Heh, not surprising but I'm taking the opposite bet.

 

That's a strategy only if the Chinese were to get bogged down, fail to establish a beachhead, and things drag on for months.

 

Then I honestly hope you are wrong!!!

 

Economic sanctions and military aid would still be effective. Of course it would drag on for months, especially when the Chinese would have to stage an amphibious assault against a large island with population of 23 million

 

"The decline in China’s share also has been attributed to Beijing working to diversify its foreign debt portfolio."
Which is a polite way of saying it's dumping US bonds and dollars.

 

Actually me too.

 

Liquidating more like it. Reportedly China's economy barely posted any growth last quarter--around a half a percent. My gut instinct is they are using the cash to buy goods to export to Russia to bypass sanctions and then selling those goods at a marked up prices for rubles to use to buy Russian oil and gas on the sly.

 

Wow great news! Now we just have to worry about the rising interest rate on the $30T+ national debt, but hey it's all good in a nutshell!

 

china likely wont invade taiwan (unless taiwan announce independence). what china might do, is use its soft power, economy/politic/ and other influence to steer taiwan. currently about 50% of taiwan export is to china+HK, this is when their relationship is cold right now. in the coming decade, most taiwan export, around 60-70% will go to china, no taiwaness politician willing to dmg their economy, risk of war just to announce independence. also china is play the long term cause as long as china economy grow, so does their military. by 2040, it will be very difficult for any nation to intervene if there is a war in taiwan strait.

 

china-russia relationship is more of convenience enemy of my enemy is my friend. they are not gonna give russia free $$, they have their own self interest.

 

And their self interest is getting oil on the cheap paid for with the marked up goods they likely bought with US dollars.