Text | Observe Jun
Over 545 billion! China has sold US bonds for 11 consecutive months, and a new round of game is coming!
In recent days, the U.S. stock market has posted its longest losing streak in more than a year, which has further exacerbated the U.S. financial woes. In addition, according to the disclosure of the US financial website, not long ago, the US banking industry fund assets had the largest outflow since the "Lehman Brothers" epidemic, with a total scale of up to $112 billion.
At the same time, the U.S. banking sector also saw a large-scale withdrawal of deposits last week, which directly led to a plunge of more than $330 billion in total U.S. deposits and fund assets.
As things stand, the crisis in the US financial sector is erupting. It is worth mentioning that at a time when the US continues to have financial problems at home, China has also seized the opportunity to take action, setting a record for 11 consecutive months of selling US bonds. According to data released by the U.S. Treasury Department, since January 2023, the pace of China's sell-off of U.S. bonds has accelerated significantly, and the latest public data shows that China's total holdings of U.S. bonds are now $775 billion, a new low since 2009, and the size of U.S. debt has shrunk by 43%.
Taking the peak of 1.32 trillion U.S. bonds held by the mainland in 2013 as a comparison, after several sell-offs, the mainland sold a total of 545 billion U.S. bonds, and the total position size shrank by more than 4%. It is worth noting that while selling US bonds, the country has also begun to make layouts, which means that a new round of game is coming!
According to data released by the State Administration of Foreign Exchange, while selling US bonds for 11 consecutive months, the mainland has also increased its gold reserves by about 314 tons for 17 consecutive months.
Selling U.S. bonds and reserving gold, the state's operation is actually equivalent to starting a war with the dollar. Some friends should know that in the financial market, there is known as the law of strong gold, weak dollar, weak gold, and strong dollar, and the practice of the country selling US bonds and reserve gold is equivalent to being bearish on the dollar and bullish on gold.
So, what does it mean to be bearish on the dollar? It means that we are trying to challenge the hegemony of the dollar in the world financial system, and if gold ends up strong, the dollar is completely weak, and now the crisis in the US financial industry continues to erupt, then our country's opportunity will come.
In addition, we should not forget that the country still has more than 700 billion US bonds on hand, although this figure is not much compared to the total scale of US bonds, but if the timing of the sale of more than 700 billion US bonds is appropriate enough, it may become the fuse that detonates US finance.
From a larger macro perspective, in recent years, the United States' unbridled fiscal stimulus and arbitrary interest rate hikes have eroded the trust of countries around the world in the US dollar as a reserve currency. According to data released by the U.S. Department of the Treasury, in addition to China's continuous sell-off of U.S. bonds in the past year or so, Japan, Saudi Arabia and European powers have also continued to sell U.S. bonds.
All in all, now a new round of the game has come, once gold completely defeats the dollar, then the US financial will inevitably collapse, the US debt will also go into default, and then the opportunity for the internationalization of the RMB will come.
Of course, we also have to guard against another thing, once the United States financial collapses, then the United States will definitely not sit idly by, and there is a high probability that force will be used, and whether we can stop it in the end may become the key to determining the pattern of the world in the next century.