Do you know how much U.S. debt China holds?
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At its peak, the mainland held more than 1 trillion U.S. bonds, but after successive sell-offs, it now only holds about 700 billion.
Many people may not understand, hasn't the United States always been at odds with us, and why does the mainland still hold such a large amount of US debt?
First of all, we need to understand what the nature of the US debt is and what impact it will have on our international relations.
For a country to develop, it is simply not enough to rely on its own money, such as building a new subway, which may need to run for decades and hundreds of years to recoup the original operating costs, not to mention the buses that have been paid for.
Another example is the construction of some large-scale projects, including the maintenance of various buildings, etc., if there is no debt at all, the development of the country will be greatly affected.
So what if you don't have money? I have to borrow money from others.
Generally speaking, national bonds are divided into two kinds of debts: internal and external, the internal debts are mainly sold to the people of their own countries or various institutions, while the external national bonds are often sold to other countries.
Compared with other debts, the country is the most trustworthy debtor in the world, after all, companies may fail, banks may go bankrupt, and a country's credit bankruptcy must be ranked last, and the interest on government bonds will be a little higher than that of banks, otherwise everyone goes to the bank to deposit, why bother to buy your treasury bonds?
Therefore, the first reason for holding treasury bonds is that this thing is indeed making money, after all, the United States is there, and it can't run, as long as it is the money he borrows, he will have to pay it back in the future.
Interest alone is already a surefire business.
Of course, there are far more reasons for international countries to buy government bonds, after all, every country needs money for development, so why should I buy your government bonds alone and not buy the government bonds of other countries?
In many cases, the act of buying can be understood as the act of borrowing money, and therefore, for the country, the purchase of a country's national bonds is also equivalent to sending a signal of goodwill to the other party in a sense.
Then the meaning of selling treasury bonds does not need to be introduced too much.
As the mainland's economy gradually takes off, the United States is also looking more and more unpleasantly at us, and may have wanted to have a good relationship with us in order to share our demographic dividend advantage, but as the mainland's economic strength gradually becomes able to threaten the United States, the relationship between the two sides has begun to fall to the freezing point.
The trade war between China and the United States in 2019 is basically a signal of various disputes between China and the United States in recent years, and since then, the two sides have been fighting back and forth economically, and therefore, in the past 26 months, we have been selling US Treasury bonds for 23 months.
The sale of government bonds, especially by a powerful country like ours, can easily give the market a bearish sentiment, and the increase in the number of dollars in the market will inevitably lead to a depreciation of the dollar.
But equally, a depreciation of the dollar will also cause the mainland's wealth to shrink.
For example, in the past, we held 100 million US dollars in debt, but the US dollar depreciated by 10%, then the value of our wealth will shrink by 10% when converted into RMB, not to mention that a large number of US bonds will cause their prices to fall rapidly.
Of course, the disadvantages of this for the United States are certainly greater than those of the mainland, so everyone does not need to be in a hurry, this kind of thing can only be done slowly.
In the face of this matter, many netizens also expressed their opinions, and some people felt that they couldn't figure out why we were buying so many U.S. bonds.
Some people also said that we should continue to reduce our holdings of US bonds, and the most important thing is to grasp the price of gold.
Of course, some people say that we are running too slowly? A year ago, there were only more than 700 billion, and now it is still more than 700 billion.
What do you think?