Here's a financial-geopolitical story that comes up a lot: CHINA OWNS THE US, can kill the dollar at will!
Like most insane ideas, it's superficially accurate: Yes, the Chinese state/central bank/entities owns a ton of US treasuries and US-denominated assets; selling them, in contrast to the @Scoresby/Voskuil's dumping fallacy (#1419032), would crash their prices and/or the dollar insofar as they sell the USD they get in exchange for the assets.
If you are only looking at the balance sheet of the People’s Bank of China, this might not have been evident. The formal foreign exchange reserves of China’s central bank have not been rising rapidly, but do not be fooled. The dollars that China Inc bought in the market in the past few months are being warehoused by the country’s big state-owned financial institutions, which added the unprecedented $100bn to foreign assets in December and another $70bn in January.
To be sure, the number of Treasuries that Chinese investors hold in US custodians has fallen sharply over time. That reflects the relatively low share of dollars in China’s reserves (presumably under 55 per cent, the last disclosed number) as well the use of non-US custodians. And China has — since at least 2010 — gone to great lengths to try to limit its US holdings, and even greater lengths to limit its visible US holdings.
And no, you can't therefore say: "China" is dumping US assets (#1419142). It sure looks like it, officially and superficially, but if that were the case the numbers (or exchange rate) would scream at us. They're not:
"If Chinese state investors are not directly buying Treasuries, they are lending money to other global investors who are. That is the only way the global flow of funds can add up""If Chinese state investors are not directly buying Treasuries, they are lending money to other global investors who are. That is the only way the global flow of funds can add up"
that does not mean that China’s state — broadly defined — stopped accumulating dollars. Rather, dollar asset accumulation has shifted from China’s State Administration of Foreign Exchange agency ($3.4tn in foreign exchange reserves, an estimated 50-55 per cent in dollars) to the state banks (about $3tn in assets,
Put simply, China has a $1tn current account surplus (only reported to be $735bn, but there is growing consensus that the reported number is understated). As such, it has to be accumulating a lot of foreign assets
If you're trying to peg your currency to a target asset, there really is no other option that constantly buying or selling that asset. With a central bank able to print yuan, the demand for buying USD and USD-denominated assets is always there.
Two options, as discussed in the piece
- other entities than PBOC are swallowing the USD
- They're faking their official numbers
Put differently, there's no China-crashing-the-dollar story. Superficial, silly analysis
archive: https://archive.md/PxDPX
I think I've heard this story for decades now: China wants a weak currency vs the dollar to give their manufacturing exports a boost. If the tariffs were/are really making it harder for foreign goods to compete with domestic, wouldn't we expect the tariffs to actually drive increased dollar buying?
I suppose so? But then again, the steelman case for tariff wasn't for them to work on price but on quantity -> relocate factories to inside US market, reducing current account deficit, and thereby China would reduce dollar buying.
So the forces are working at cross-purposes
Just like @denlillaapan does not use sybils to pump his posts and milk rewards.
So undisciplined.
Yeah right.
https://m.stacker.news/132117
China is buying gold and building global infrastructure- this is no secret.
Japan and the UK were buying USTs to prop up their masters dollar but they now have their own problems.
US empire is in decline.
This gets at something fundamental: nation-states are trapped by the systems they've built. China can't dump treasuries without imploding its own dollar reserves and export-dependent economy. It's the same reason the US can't actually "weaponize" the dollar the way people think—the system has become its own constraint. In my years of analyzing macro conditions alongside Bitcoin cycles, I've noticed that whenever Treasury dysfunction fears spike, it usually coincides with moments when Bitcoin's long-term value proposition becomes clearest to new investors. The more people understand that traditional financial leverage is illusory, the more they start thinking about what actually can't be printed or politically constrained—which changes how you approach accumulation strategy during these windows.