With the Federal Reserve's interest rate hike policy, the U.S. economy has experienced an inflationary situation, causing many countries around the world to sell U.S. bonds. The most notable of these is China, which has sold US bonds for 14 consecutive months, amounting to $541.9 billion. In addition, Japan, the United Kingdom, South Korea and other countries have also chosen to sell US bonds, and a total of 121 countries have joined the "de-dollarization" action. Not only that, China has also increased its holdings in large quantities, which is considered to be a typical representative of "selling US bonds and exchanging **".
1.Dollar dominance threatened: The collective sell-off of U.S. bonds by many countries around the world will directly threaten the dollar's dominance in the international market. China is the second largest creditor of U.S. debt with $778.1 billion, followed by Japan and the United Kingdom, respectively. This massive sell-off had a direct impact on the dollar's international standing.
2.Serious holes in the U.S. economy: The U.S. debt boom has spilled over into the U.S. economy. The collapse and liquidation of the three major US banks is the best example of this crisis. However, U.S. Treasury Secretary Janet Yellen is reluctant to acknowledge the downward trend of the U.S. economy, insisting that this is only a temporary problem, believing that this crisis can be resolved soon through the help of other countries.
1.Dissatisfaction with U.S. Dollar Hegemony: Behind China's long-term sell-off of U.S. bonds is dissatisfaction with U.S. dollar hegemony. As the world's most important reserve currency, the US dollar monopolizes global economic transactions and causes economic damage to some countries. China's proposal for the BRICS to establish a new currency aims to break this hegemony and promote global economic development.
2.Increasing reserves: China has increased its holdings in large quantities, which can be used as a safe reserve to replace U.S. bonds. It has the characteristics of maintaining and increasing its value, and U.S. bonds are becoming more and more unstable, and selling U.S. bonds in exchange for them is also in line with the needs of China's economic development.
1.Deepening U.S. Fiscal Deficit: The U.S. has long relied on borrowing to sustain economic growth, and the global sell-off of U.S. debt is bound to exacerbate the U.S. fiscal deficit and further pressure on the U.S. economy.
2.Reshaping the global economic landscape: The large-scale sell-off of U.S. bonds has led to the reshaping of the global economic system, and the international financial system, which was originally dominated by the US dollar, will face significant impacts and challenges. Countries are actively exploring new economic structures and financial systems in order to achieve common prosperity.
China has long held a large amount of U.S. debt and is the second largest creditor of U.S. debt. In the face of the risk of a thunderstorm in U.S. bonds, China has sold U.S. bonds for 14 consecutive months and continued to increase its holdings**, which is interpreted as China's increasing selling of U.S. bonds in exchange for safer reserve assets.
China's move was motivated not only by dissatisfaction with the hegemony of the dollar, but also by fears of a US fiscal deficit and economic recession. China wants to protect its economic security by selling US bonds and increasing its holdings**, and advocates for a diversified international financial system.
U.S. Treasury Secretary Janet Yellen wants China to take over the U.S. bonds issued next quarter and stop selling. However, China's sell-off in US bonds is based on considerations for dollar hegemony and economic security, and China is unwilling to pay for the difficulties of the US economy.
Yellen's refusal to demand $280 billion from Japan shows that the United States itself cannot afford to borrow more. This move has made the outside world see that the United States, as the world's largest economy and the world's largest power, is unwilling to fulfill its obligation to repay its debts, resulting in the image of not repaying the money.
The outbreak of the U.S. debt crisis has not only exposed the fragility of the U.S. economy, but also had a serious impact on the global economic system. The sell-off in China and other countries shows a question about the hegemony of the dollar and a rethinking of the global economic order. Against the backdrop of the global sell-off of US bonds, China has always insisted on rejecting hegemonism and calling for the establishment of a new monetary system with integrity and fairness.
For China, the purpose of selling US bonds is to protect its own economic security and actively promote the stable development of the global economy. However, the refusal of the US side and the sanctions on Chinese companies have led to growing tensions between China and the United States, which has adversely affected the economies of both countries and the global economy.
In the face of the challenges and changes in the global economy, China should further strengthen independent innovation in the financial sector and reform of the financial system, play a more active role in the international arena, and promote the multilateral development and prosperity of the global economy. At the same time, China also needs to strengthen the stability and development of its domestic market, reduce its dependence on the US dollar, and achieve sustainable economic development.