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Preface
United States has a national debt of 34 trillion, but still wants China to lose money? This may sound like an absurd joke, but it is what is really happening, and in the face of United States' unreasonable demands, China's central bank made an unexpected move to stop buying gold. Is China prepared for the worst?
United States' debt woes
United States national debt problem is not a day or two, but the recent data is still staggering, $34.7 trillion, what does this figure mean? Simply calculated, it is equivalent to every United States carrying a debt of $100,000, imagine how ridiculous it is that a newborn baby has already owed $100,000 in debt before he has time to open his eyes!
But what is even more terrifying is that this number is still rising, and the United States government seems to be in a bottomless pit, the more it wants to climb out, but it is getting deeper and deeper, and according to the current trend, the interest that the United States needs to pay in ten years alone may be as high as 12 trillion dollars, which is a chilling figure.
In the face of such a grim situation, the United States government seems unusually calm, and Treasury Secretary Yellen is still talking about a debt management plan, saying that she will cut $3 trillion in debt within ten years. However, if you do the math, you will find that this amount of money is a drop in the bucket.
More worryingly, United States' public debt is already close to 100%, what does that mean? To put it simply, the debt of the United States is already about the same as its total economic output in a year, which is like a person's debt is already equivalent to his income in a year, do you think the person's financial situation is still healthy?
In the face of such a dilemma, the United States government is still raising interest rates, which seems to attract funds, but in fact it is drinking to quench its thirst, because higher interest rates mean higher interest expenses, which will undoubtedly make United States's debt burden heavier.
This makes it curious, how long can United States last? Have they realized that they are heading for a cliff? Or do they have any other tricks to defuse this seemingly unsolvable debt crisis?
United States's unreasonable demands
Just when the debt crisis in United States intensified, they actually came up with a "clever plan" to make China pay for the new crown epidemic, which is simply a fantasy! Let's take a look at their "high theory".
A conservative think tank in the United States threw out a staggering figure that the coronavirus pandemic had cost the United States $18 trillion, where did that figure come from? I'm afraid that even they themselves can't say clearly, but they have the audacity to claim that China should be held responsible for this and compensate.
Their argument is even more ridiculous: China is the "closest origin" country of the new coronavirus, which not only lacks scientific basis, but also is a blasphemy against global anti-epidemic efforts, knowing that the virus knows no borders, the epidemic is the common enemy of all mankind, and shifting the blame to one country will only make the global anti-epidemic efforts go to waste.
What is even more ironic is that former President Trump of United States publicly demanded that China pay $10 trillion in compensation, how was this figure calculated? Could it be the circle he drew on the paper? Such a ridiculous request can only show that some politicians United States have lost their minds.
In the final analysis, these remarks of the United States are just to deflect domestic contradictions and cover up the fact that they are not effective in fighting the epidemic, who said that "the new crown epidemic is not serious" at that time, and who caused the death of at least 1 million people in United States? The answer is obvious.
In the face of United States' unreasonable demands, the response of the Chinese Foreign Ministry spokesman can be described as to hit the nail on the head, and what should really be held accountable are those hypocritical politicians who do not care about the lives and health of the people.
This behavior of the United States is tantamount to a lawsuit filed by the wicked first, not only does it not reflect on its own problems, but tries to shift the responsibility to others, which not only does not help solve the problem, but also damages international relations and hinders global economic recovery.
At this critical juncture, what we need is solidarity and cooperation, not mutual accusations, and the United States government should face up to its own problems and show the attitude of a responsible major country, instead of throwing the pot around, only in this way can it truly contribute to the global economic recovery.
China's response
In the face of United States' unreasonable demands and global economic uncertainty, China has taken a series of subtle responses, the most notable of which is the central bank's decision to stop buying gold.
We must understand that gold has always been regarded as the "king" of safe-haven assets, and in times of economic turmoil, central banks tend to increase gold reserves to deal with possible risks, however, the central bank of China has pressed the "pause button" at this time, why?
The answer is actually very simple, China is well prepared, and the data shows that China's gold reserves have reached 2,264 tons, which may not sound intuitive, but you know, this is equivalent to 72.8 million ounces of gold! Such large reserves are enough to cope with all possible economic risks.
More importantly, what does it mean that China's foreign exchange reserves are as high as $3.2 trillion, ranking first in the world for 18 consecutive years? To put it simply, China has enough "ammunition" to deal with any possible economic shock.
So why stop buying gold at this time? There are two considerations here
First, avoid buying at a high price, at present, the global economic uncertainty is intensifying, the price of gold is already at a high level, continue to buy in large quantities, may cause unnecessary losses.
Second, by suspending purchases, China can better observe changes in the global economic situation and make decisions at the right time, which is the embodiment of China's economic wisdom.
At the same time, China is actively promoting the internationalization of the renminbi and reducing its dependence on the US dollar, a long-term strategy aimed at increasing China's voice in the international financial system.
Therefore, we have to admire the foresight of China's decision-makers, who do not simply follow the market, but make decisions that are most conducive to the long-term development of the country according to their own strength and the global situation.
In this era of uncertainty, China's moves have undoubtedly injected a shot in the arm for the world economy, sending a clear signal to the world that China has the ability to stabilize itself and contribute to global economic stability, no matter how big the storm is.
Isn't that the responsibility of a responsible major country?
The new landscape of the global economy
Against the backdrop of the United States debt crisis and China's steady response, the global economic landscape is quietly changing, and the most striking trend is the wave of "de-dollarization".
Let's start by looking at the movements of its neighbors, India, the most populous country, has recently made a remarkable move, with India's GDP growing by 8.2% year-on-year in 2023, which is an impressive number, but more interestingly, India seems to spend most of its proceeds on gold.
Why is India doing this? The answer is simple: risk aversion, India's long-standing over-reliance on the dollar economy makes it particularly vulnerable to economic volatility in the United States, and by buying gold heavily, India is preparing for a possible economic storm.
Not only India, but many countries are seeking to get rid of dollar dependence, and we see that China, Saudi Arabia and other countries are constantly selling US bonds, and even "United States allies" such as Korea have begun to reduce their US debt holdings, these actions send a clear signal that the hegemony of the dollar is shaking.
What's more noteworthy is that more and more countries are choosing the renminbi as their settlement currency, not only because of the strong performance of the Chinese economy, but also because of the shaking confidence in the dollar, after all, who wants to bet their wealth on a country that is heavily indebted?
Under this trend, the United States is in an increasingly awkward position, on the one hand, they need to maintain the global status of the dollar, and on the other hand, they have to attract funds by constantly raising interest rates to cope with their own debt crisis, which is tantamount to drinking to quench thirst, and will only accelerate the decline of dollar hegemony.
We are witnessing the birth of a new global economic order, in which no single country can dominate the world, but instead we are seeing a multipolar and more balanced economic landscape.
This change is not a good thing for the global economy, it will force countries to manage their economies more carefully, and it will also provide more opportunities for developing countries, of course, the process may be painful, but in the long run, it will bring greater stability and sustainability to the global economy.
epilogue
In this great change in the global economy, we have seen the predicament of United States, and we have also witnessed the wisdom of China, United States trying to pass on the crisis through unreasonable demands, but this can only be in vain, in contrast, China has not only effectively responded to risks through prudent policies and flexible strategies, but also contributed to global economic stability,
What we need is mutually beneficial and win-win cooperation, not zero-sum confrontation, and only by working together can we jointly address the challenges facing the global economy and create a fairer and more prosperous world economic order.
In this new era full of challenges and opportunities, China is injecting stability into the world economy as a responsible major country, and we have reason to believe that as long as we adhere to the principles of openness, cooperation, mutual benefit and win-win results, mankind will eventually usher in a better economic future.
Resources
[1] Hexun.com2024-07-09 "China's central bank stopped buying gold for the second month in a row, and other central banks are still increasing their holdings"
[2] Overseas Network2024-01-08 "China's Foreign Reserves Return to 3.2 Trillion US Dollars, No. 1 in the World for 18 Consecutive Years"
[3] Biosafety Information Network2023-05-19 "Study says that the economic damage caused by COVID-19 to United States will reach $14 trillion by the end of 2023"
[4] China Real Estate News2024-07-05 "The stress test is over, United States Treasury bonds and high interest rates are hard to bear"
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