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What would be the serious consequences if China sold off all its U.S. bonds? Dollar hegemony or faltering?
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Introduction. U.S. ** bonds have played an important role in the contemporary world's financial system. As countries like China hold more and more U.S. bonds, there are more and more rumors about whether China will sell all of its U.S. bonds. If China does sell a lot of U.S. bonds, what kind of impact will it have on the world economy and the hegemony of the United States? This article discusses this issue in more detail.
Short selling of U.S. Treasuries. China's holdings of U.S. debt have increased every year since 2022, but that doesn't mean China will stay that way. If China has a large number of U.S. bonds, it will bring a big blow to the U.S. economy. But even if China is the holder of the world's largest U.S. bonds, its unilateral ** cannot easily overthrow U.S. hegemony.
Extended reading: Selling U.S. bonds doesn't happen overnight. China is the world's largest holder of U.S. bonds, and if there are large numbers of these bonds, the U.S. economy will be hit hard. Since U.S. debt accounts for the majority of U.S. Treasury bonds, if China loses a large amount of U.S. debt, it will increase the cost of raising funds in the United States, which will have an impact on the financial environment in the United States. However, the U.S. economy is huge and complex, and it won't be destroyed by one country. After all, as the world's most important reserve currency, its position will not be easily shaken. Therefore, China alone was not enough to overthrow Yuan's dominance.
World influence.
China is not the only one with huge US bonds, many Saudi Arabians, Japan and others also have huge US bonds. If China takes the lead in selling**, it will have a ripple effect around the world. Other countries have also sold US bonds one after another, which has brought a more serious impact on US hegemony.
Read more: China's move may lead to other regions following suit. There is no shortage of countries with huge US bonds, especially economic powerhouses such as Japan. If China takes the lead in selling**, it will cause a knock-on effect elsewhere, causing turmoil in the world's financial markets. It can be seen from this that when this sell-off boom sweeps the world, the hegemony of the United States will be tested more and there may be a drastic shock, which will have an impact on the development of the world economy.
Domestic. Most of the U.S. bonds are invested in military spending and social security programs relative to repaying its liabilities. If China has a huge national debt, the United States will be forced to reduce its military spending and equity programs, triggering social unrest. In addition, the sale of U.S. bonds will also cause a dollar **, which will cause problems for U.S. exports, which will have an adverse impact on the country's economy.
Extended reading: U.S. long-term bonds are a diversified investment tool, which is not only to meet the best expenses, but also to maintain the stability of the country and the happiness of the people. If China has a huge national debt, then the United States will have to reduce some of its military spending as well as its benefit plans, which will cause a huge reaction at home. In addition, U.S. exports have been greatly impacted, which has had a great impact on the stability of the U.S. economy.
Brief summary. From the above research, we can conclude that if China completely sells US debt, although it will not have a positive impact on the dominance of the United States, it will have a profound impact on the economic development of the United States, the global financial market, and the relations between countries around the world. Therefore, while protecting its own rights and interests, China should also be cautious in handling the trading of U.S. bonds to prevent triggering violent fluctuations around the world. At the same time, the financial ties and interdependence among the countries of the world have also sounded a wake-up call for us: In order to maintain the stability and development of the world economy, it is necessary to strengthen the coordination and coordination of the international financial system.
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