Recently, the U.S. Congress has failed to approve Biden's proposed budget spending for fiscal year 2024, resulting in the risk of a shutdown in the United States. At present, the U.S. Congress has passed a temporary spending bill that temporarily solves the problem of ** operation, but this can only be supported until January 17 next year. As the Republican-controlled House of Representatives doesn't let go easily heading into an election year, Biden is still facing financial woes.
It all stems from the story behind Congress's passage of the Temporary Spending Act. Speaker of the House of Representatives McCarthy pushed for the passage of the bill, but was ousted by Republicans. While the support of Democratic lawmakers alone is not enough, it was at a critical moment that the Democrats openly supported the removal of McCarthy in exchange for the more hawkish Republican Speaker Johnson. Johnson questioned Biden's budget spending, especially for the budget bill that includes military aid to Ukraine, and he firmly stated that he would not support it.
To solve its fiscal woes, the United States has set its sights on China. According to China's latest foreign exchange reserve data, as of the end of last year, China's foreign exchange reserves reached 3$2 trillion. China has become the country with the largest foreign exchange reserves by virtue of its strong foreign exports. As the world's factory, China has earned huge foreign exchange earnings from the export of various industrial products, especially large amounts of US dollars. With more than 80% of the world's exports in US dollars, China's exports have led to large US dollar foreign exchange reserves. It is precisely because of China's huge foreign exchange reserves that the United States has tried to force China to increase its holdings of US Treasury bonds through various means.
U.S. Treasury Secretary Janet Yellen publicly stated late last year that she planned to visit China again in 2024 and tried to persuade China to increase her holdings of U.S. Treasury bonds. As the world's largest foreign exchange reserver, China has the ability to increase its holdings of U.S. Treasury bonds. Although the U.S. national debt has exceeded $34 trillion, far exceeding the total U.S. economy, the U.S. continues to issue Treasury bonds to maintain the operation of the national debt system. Although the United States hopes that China will increase its holdings of U.S. bonds, it has not relaxed its efforts to contain China. Recently, the U.S. Navy sent the USS CVN70 Carl Vinson into the South China Sea to demonstrate against China. The U.S. Navy's aircraft carrier strike group and the Philippine Navy held joint military exercises to further strengthen deterrence against China.
China has huge foreign exchange reserves, which makes China an important player in the global foreign exchange market. According to publicly available data, as of the end of last year, China's foreign exchange reserves reached 32 trillion dollars, ranking first in the world. This huge foreign exchange reserve is the result of China's long-term external surplus, and it is also one of the symbols of China's economic development.
Known as the "factory of the world", China has become the world's largest exporter of goods by virtue of its strong manufacturing strength and export competitiveness. China's merchandise exports are settled in US dollars, which has led to a large inflow of US dollars into China, which in turn has created a huge US dollar foreign exchange reserves. As the world's largest foreign exchange reserve, China's holdings of U.S. Treasury bonds are also very large.
In recent years, the United States has been trying to force China to increase its holdings of U.S. Treasury bonds in various ways in order to maintain the U.S. fiscal balance. However, China did not passively accept the demands of the United States, but adjusted according to its own interests and needs. As the world's largest foreign exchange reserve, China has sufficient confidence and strength to manage its foreign exchange reserves.
From China's perspective, the decision to increase its holdings of U.S. Treasuries is a complex trade-off. China needs to maintain the stability and security of its foreign exchange assets, while also considering the rate of return and risk of U.S. Treasuries. Although U.S. Treasuries have always been considered a relatively safe investment vehicle, they are also subject to uncertainty and potential risks.
In response to the demands of the United States, China has taken a series of countermeasures. China is gradually diversifying its portfolio of foreign exchange reserves, investing money in other countries' bond,** and other asset markets to reduce its dependence on U.S. Treasuries. In addition, China has also strengthened its monitoring and research of the U.S. Treasury market, closely monitoring the U.S. fiscal position and risk changes.
The latest incident once again demonstrates the United States' intentions to contain and deter China. The U.S. Navy sent the CVN70 aircraft carrier USS Carl Vinson into the South China Sea, which was seen as a demonstration against China. At the same time, the U.S. Navy Carrier Strike Group also conducted joint military exercises with the Philippine Navy to demonstrate its military strength to China.
The South China Sea is China's territory, and China has sovereignty over the South China Sea. The pretext of "freedom of navigation" does not hide the provocations of the United States against China. The United States sent ** to invade the South China Sea in an attempt to counterbalance China's regional influence through military means. However, such acts will only exacerbate regional tensions and are not conducive to regional peace and stability.
China remains highly vigilant against U.S. provocations and has taken corresponding measures to respond to them. The squadron has always upheld the territorial integrity and sovereignty of the country and firmly opposes any form of foreign interference and pressure. China advocates resolving disputes and differences through dialogue and negotiation, and promotes common development through win-win cooperation among all parties in the region.
As a sovereign country, China has the right to safeguard its own interests and development path. China adheres to an independent foreign policy and has made a series of policy decisions in accordance with its own interests and the international situation.
Whether facing financial pressure or regional challenges, China will make its own choices in line with the principle of safeguarding national interests and regional peace and stability. China will continue to adhere to the mutually beneficial and win-win strategy of opening-up and promote the development of economic globalization. At the same time, China is willing to work with the international community to actively participate in global governance and jointly build a world of lasting peace, stability and prosperity.
In the current uncertain and changing international environment, China will continue to unswervingly follow its own development path and will not be swayed by external pressures. China will maintain friendly and cooperative relations with other countries, actively promote the building of a community with a shared future for mankind, and make its own contribution to world peace and prosperity.