This year is the lowest year for the mainland to hold U.S. debt since 2009, with only $775 billion remaining. Recently, the mainland has been selling off US bonds, and in February it reduced its holdings by $22.7 billion.
Wall Street fund managers believe that the reason why China continues to reduce its holdings of U.S. bonds is to try to avoid the risk of continuous price fluctuations in U.S. bonds under the influence of U.S. inflation and employment data. But while reducing our holdings of US Treasuries, we are increasing our gold reserves.
For example, as of the end of March this year, the mainland's gold reserves have increased for 17 consecutive months, and in these 17 months, the cumulative increase of 10.1 million ounces of gold has now reached a total of 7274000 ounces.
In fact, it is not only China that is reducing its holdings of U.S. bonds, but also Switzerland, which sold more U.S. bonds than China in February, reducing its holdings of $26.5 billion in government bonds. Switzerland's domestic banking and financial industry is well developed, and Switzerland's move may also send some different signals.
Not only have many countries begun to reduce their holdings of U.S. bonds, but even the demand for new U.S. bonds to be issued abroad has weakened. On April 25, the U.S. Treasury auctioned Treasury bonds, this time with a seven-year U.S. Treasury bond worth $44 billion, but the final auction size did not set a record, and many data indicators were lower than the previous average.
This series of situations is likely to indicate a problem, perhaps the U.S. debt crisis is really coming, and there is a high probability that there will be problems in the U.S. economy and finance after that.
Presumably, the news of the collapse of many regional banks, including Silicon Valley Bank in the United States, is still fresh in everyone's memory, and according to the latest news, regional banks in the United States may be facing a new round of crisis.
On March 1, the stock price of the New York Community Bank plummeted, falling as much as 25%. This is the lowest closing figure for the share price of New York Community Bank since 1997, and if you start counting from January, then the cumulative decline of New York Community Bank has reached more than 60%. It's not just New York community banks, but other regional banks are falling.
So now it can be seen that the pressure on regional banks in the United States is unprecedented. The rain is about to come, and there may really be a possibility of a new round of financial crisis. Combined with the recent decline in the exchange rates of other non-US currencies in the world, we should really be prepared this time.
It is likely that the country is now increasing its holdings of gold, and if the US finance really can't hold on this time, then we may be able to replace it with the yuan and the dollar.
This is not impossible, and the renminbi has now shown unparalleled resilience in the midst of financial turmoil around the world. The yen and the won are falling, and the yen has even burst the exchange rate of 158 won. Southeast Asia's currencies are also underperforming, and the renminbi simply stands out from the crowd.
The reason why the renminbi can maintain such good stability is that we have a huge domestic market and strong productive forces that can match it, coupled with our stable macroeconomic policies and other reasons, which can always keep the renminbi at a relatively stable exchange rate.
Although the domestic stock market has also fallen, the impact has been limited. The stability and excellent performance of the renminbi is one of the favorable proofs that it can replace the dollar in the future.
But then again, even after the financial turmoil, the renminbi still hasn't replaced the dollar, so that's not much of a loss for us. Overall, we have been able to seize this opportunity so far. It doesn't matter if the United States does survive this crisis, we can wait for the next opportunity.
Now all we have to do is wait for the right moment and wait for a critical juncture. Clever use of the cards in hand, such as the $775 billion in Treasury bonds we now hold, may be the straw that will eventually crush US finance.
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