Introduction:
In the first 48 hours of the year, two major events flare up at the same time, attracting a lot of attention. First of all, the Chinese and US leaders congratulated each other on New Year's Day, opening up new opportunities for the development of bilateral relations. Second, the U.S. has a whopping 34 trillion national debt, raising concerns about U.S. financial stability. Although there does not seem to be a necessary connection between the two events, there may be some correlation between the two. This paper conducts an in-depth study on Sino-US relations, the U.S. debt problem and its impact on the world economy, and conducts in-depth research and prospects on the outbreak of the "U.S. debt tsunami".
Biden wrote a letter to China pointing to new opportunities between China and the United States.
China and the United States will celebrate their 45th anniversary of diplomatic relations on January 1 next year. Today is a day for the two leaders of China and the United States to congratulate each other, and it is also an important day for friendly cooperation between the two sides.
Mr. Biden took a softer tone in a personal letter to China. He no longer made negative comments, but spoke highly of the importance of Sino-US cooperation for the development of the two countries and the whole world, and pointed out that Sino-US relations should be handled responsibly. The above statement shows that the Biden administration is very concerned about China-US relations, and has laid a good foundation for cooperation and dialogue between the two sides.
However, the détente emphasized in the letter is perhaps an expectation. China is the world's second-largest economy and the second-largest bondholder in the United States, so it's able to ** more dollars. Biden may want China to provide assistance to the US debt problem, so as to reduce the pressure on the circulation of US debt and improve US market confidence. However, China's holdings in U.S. bonds have been reduced several times, and its holdings have reached their lowest level since 2009, which is not in line with U.S. expectations.
China's reduction of U.S. debt is based on its own strategic considerations. By doing so, we can avoid both the political and diplomatic crisis of the US debt, as well as the default of the debtThe second is to adapt to the current trend of RMB internationalization. Therefore, China's presence in China is entirely for its own national interests, not for the United States. If the U.S. wants to get help from China, then Washington should show its true will and make tangible commitments on the "** issue."
The U.S. national debt is as high as 34 trillion, causing panic around the world.
Just as China and the United States are celebrating 45 years of diplomatic relations, the U.S. Treasury Department announced an important news on January 2 next year: the total debt of the United States** has exceeded 34 trillion, the first time in history.
Behind this data lies a worrying problem. If measured by an interest rate of 5%, then the interest paid by the United States is as high as $1.5 trillion a year. This is a huge burden on the finances of the United States. Moreover, due to the expansion of the size of the U.S. national debt, it has "snowballed" to increase people's doubts about the solvency of the United States, thus bringing a huge adverse impact on the U.S. economy.
In this context, some may wonder if China, the largest holder of foreign debt in the United States, can reduce the debt crisis in the United States by buying U.S. bondsHowever, according to previous figures, China has reduced its holdings of US bonds for seven months, and its holdings have fallen to their lowest level since 2009. China's decision to issue U.S. bonds this time is a strategic decision to prevent U.S. debt default and political and economic considerations. In addition, the reduction of ** issuance is also part of China's push to internationalize its currency.
As far as the United States is concerned, although they want China to increase its American debt, they cannot force China to do so. China's reduction of U.S. debt is based on its own interests, and U.S.** concerns about this do not solve the problem. In order to gain China's cooperation, the United States must show more goodwill. So far, however, the United States has not responded to China's expectations of cooperation with China. For example, while China has repeatedly reiterated that the United States must honor its "One China" commitments, the Biden administration passed a new round of sanctions against Taiwan last month, and it is only natural that China should refuse to cooperate financially with the United States.
The U.S. debt crisis is on the horizon, and there are worries and challenges.
Biden's administration, under the pressure of ever-increasing debt, will be a huge challenge in both the short and long term. They must consult with Republicans in the near future to prevent a repeat of another "shutdown" incident. The way the U.S. debt is repaid and the world's trust in it is also important in the long run.
If the problem is not properly solved in the short term, the impact on the current management will be the greatest, and in the long run, the consequences of this problem will be more severe. If global trust in U.S. bonds and the U.S. dollar collapses, the U.S. economy will be devastated, potentially leading to the complete destruction of the U.S. economic foundations. Therefore, whether it is Biden or other Americans, they must focus on their own problems.
The huge debt problem of the United States may spread around the world, but the United States itself will have to bear huge losses. As the U.S. Treasury continues to rise, this "U.S. debt tsunami" looks imminent, but it is only a matter of time.
The conclusion is: at present, a new development opportunity has emerged between China and the United States, and Biden's letter to China has opened a new path for bilateral exchanges and cooperation. However, the views of China and the United States on the US debt and the Taiwan issue are the two main causes of conflict in the relationship between the two countries. While China has reduced its holdings of U.S. debt in recent months, it has done so out of its own strategic considerations, not something that the U.S. can control. If the U.S. debt crisis causes a collapse of world trust in the U.S. economy, the U.S. economy will suffer a blow and potentially undermine its economic foundations. Therefore, whether it is Biden or the future United States, they must take the US debt crisis seriously and negotiate with the Republican Party to find a way to ensure the financial stability of their country and maintain the trust of the world in the US bond market.
In short, the exchange of congratulatory messages between the Chinese and US heads of state at the beginning of 2024 and the more than $34 trillion in US debt indicate that there is a possible correlation between the debt crisis between China and the United States and the United States, and the two major events do not seem to be necessarily linked. How the relationship between China and the United States develops and how the sovereign debt of the United States is maintained will be a very important matter for the two countries and the whole world. China and the United States should proceed from their own national interests and handle various issues through dialogue and cooperation, so as to promote the stability and sustainable development of the world economy.