China has allowed the yuan to depreciate so that 1 US dollar buys more than 7 yuan. (REUTERS: Thomas White)
Julia Horowitz, CNN Business: China has a $1 trillion trade war weapon. Will it ever use it?
London (CNN Business)In the US-China trade war, it's been a week of rapid escalation. Beijing devalued the yuan after the Trump administration threatened to slap tariffs on just about every Chinese export. The United States then labeled China a "currency manipulator," deepening the rift.
The exchanges have rocked global markets and threaten the global economy. What happens next is anyone's guess.
China has said it is prepared to fight, if necessary. And it has one hugely powerful weapon up its sleeve: it's the American government's biggest creditor.
In theory, Beijing could trigger a panic in bond markets by dumping some of the $1.1 trillion in US Treasuries that it owns.
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WNU Editor: The problem with all of this speculation on China's US treasury holdings is that this money has probably already been leveraged for other loans (see link here). And even if China decides to sell these holdings (if it has not been used as collateral), I know that they will be bought up almost immediately. The U.S. is a $22 trillion economy, and there are many other players who would like to get their hands on these bonds. This talk of a Chinese $1 trillion trade weapon is just that .... talk.
Tell me one option China has to win this trade war
ReplyDelete2 years ago before Trump the entire MSM told us china is unstoppable. 5 years ago they told us to better learn Chinese.
Today: fewer people than ever study Chinese. Fewer business people travel to China. No one wants to go there. I've done business there. I've seen what it was like 5-10 years back and now. Is going down hill and everyone is leaving the ship.
You've got business contacts in China. You must know how they already 10 years ago loved their economic development but were concerned that the government is faking their data and growth numbers were impossible. Well turns out they were. As others have commented here china's hdp is perhaps up to 30% below their official numbers making a 1.5bn people (almost 5 times more people than the US who all were told their future will be equal or better then in the US if they follow the party line and accept the surveillance state and all the personal restrictions etc etc).. well guess what now their gdp is falling, the debtors as you pointed out will want their money..there are almost no savings in the private sector it was red hot spending for decades all borrowed. The housing bubble will hit right about March /April market announcements. The 300bn from now and previous tarifs will hit by then fully. China managed to create adversaries out of neighbors all around them. They are fucked. Even Russia must know that the Chinese will be a threat to them. The Chinese as you and also others pointed out are fools, absolute utter fools wegen it comes to international politics. How on earth do you manage to be the number 2-3 country in the world and create enemies of all your neighbours? The stupidity.
And our people and our media talk them up. Talk us down. Tell us we wouldn't gave a chance. Are they mad? We barely even try and win already lol. The MSM is poison to our greatness and our minds. We should just send them CNN and they'll get destroyed by this mindnumbing idiocracy that noone should be watching unless for satire
Back to china: they have no way forward. None. They can't afford war either. All the nations in the Asia Pacific and east Asia have been and are accelerating their arming for that. And on top NATO and the US. And we have Connor McGregor. We could just send him and f'ck them up. Badly.
Half joking ofc but realistically China is fcked. I work in industries closely connected to these markets and ask manufacturers are fleeing China. For years now. It is no longer a secret. No one in his mind days "you know what would be a good investment opportunity? China! " unless he's making a joke. That ethno state imprisoned a million Muslims for reeducation, forcefukky resettled mullions and mullions over the last few years. Has torture cells (sleep deprivation camps ) for dissidents. What do you think hong Kong protests are about? They are scared to be under full Chinese rule. .which they are and the world gets to watch...
The Chinese don't understand that the World speaks English. sure by numbers you have more Spanish and Chinese etc but by money you speak English. You go to Singapore: English, Vietnam better chance to do business in English than Chinese and they are neighbours. All of Europe almost entirely English as international biz language. No one learns Chinese anymore and falls for that investment trap.
I think the Chinese myth is over.. they will turn inwards again as they did before.. they will build some doomsday devices like Russia to still be relevant and Xi likely gets removed in a few years. Emperor for life. My Ass. With his miserable track record he should be very happy to live past Trump's second term lol