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The U.S.-China Debt Dispute: A Clear Picture
The United States, a country known for its domineering and meddling in the affairs of other countries, has recently become a little intimidated. In the face of China's continuous selling of US Treasuries, the United States seems to feel a lot of pressure. They put forward three conditions that seem to blame China for its ruthlessness, but in fact, the United States itself is not benevolent.
China has a large amount of U.S. Treasury bonds, which are issued by the U.S. government by borrowing money from the people. The U.S. government needs huge sums of money to keep the state apparatus running, but when the funds are insufficient, they have to borrow money from the people. However, this is not gratuitous, and the government needs to pay interest. China is one of the main holders of U.S. Treasuries, largely because it has always been a major exporter and maintains a surplus trade relationship with the United States, and the surplus money is used to buy U.S. Treasuries.
The large issuance of U.S. Treasuries has attracted global investors because the U.S. economy has been in relatively good shape. However, the amount of U.S. Treasuries that China has is somewhat worrying. Why doesn't China sell these Treasuries against the backdrop of declining economic conditions in the United States and economic pressure on China?
Selling U.S. Treasuries is not a short-term project, as a massive sell-off could trigger turmoil in the foreign exchange market. In addition, the sell-off will lead to exchange rate instability, and a rapidly appreciating renminbi will cause problems for China's exports. In addition to the U.S. debt passively acquired due to the trade surplus, China has also actively purchased some to maintain exchange rate stability and pursue high interest rates. China's economy is developing rapidly and its interaction with other countries is increasing, so it needs to hold dollars to trade.
The attitude of the Chinese government is very important. The three conditions put forward by the United States are based on its own interests, not the interests of other countries. First, they demand that China stop selling U.S. Treasuries, but China cannot allow U.S. hegemonic behavior. These government bonds are in China's hands, and China has the right to decide what to do with them. China has a huge U.S. Treasury debt, which makes it impossible for the United States to act rashly.
The United States also demanded that China stop infringing U.S. intellectual property rights and stop manipulating its currency. These demands are clearly self-interested, ignoring the needs of other countries.
In the future, we need to continue to observe the attitude towards the handling of US Treasuries. It is not realistic to sell US Treasuries across the board, so caution must be taken. Only by strengthening its own national strength and getting rid of its dependence on the US dollar can we better safeguard China's interests. Today's world is like a big family, and China should continue to work for its own interests and not be swayed by the hegemonic behavior of the United States.
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