China bows to the United States? Suddenly, China increased its holdings of $12.4 billion in U.S. bonds, fulfilling Biden?
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China's sudden increase in investment in U.S. bonds has raised speculation and suspicions.
China's recent sudden increase in U.S. bonds by $12.4 billion is the beginning of a continuous reduction in its holdings for more than seven months. The move has raised a lot of suspicion, especially given the tensions between China and the United States. Why is China doing this? Does this mean that China has bowed to the United States, or is it Biden's way of governing? Let's take a look at why this is the case.
China's increase in U.S. debt is not an isolated case, but Japan and the United Kingdom have also increased their investment in U.S. bonds. Especially in view of the current financial crisis in the United States, Britain and Japan, two of America's most important allies, should lend a helping hand. In addition, the continued fiscal easing in the United States in recent years and the rising expectations of interest rate cuts have led to a decline in the yield of US bonds. However, the recent shift in US monetary policy from dovish to hawkish, the decline in interest rate cut expectations, and the rise in US bond yields have triggered a negative increase in investors.
In the long run, China should maintain the stability of world finance.
For China, the increase in U.S. bond investment is not only because the U.S. has weathered the financial crisis, but also because it is not a unilateral aid to the United States. China's measures are more focused on maintaining world financial stability and its long-term national interests.
First of all, U.S. bonds are the safest in the world, and their smooth operation is related to the stability of world finance. Despite its poor financial situation, the United States is still the world's largest economic power, and at the same time, it is also the largest country in the world, and its exchange rate and the operation of the world's financial system play a pivotal role for it. Therefore, it is in the interest of all countries in the world to maintain the stability of the US bond market.
Second, China has huge foreign exchange reserves and is the world's second-largest economic power. Maintaining an appropriate amount of US Treasury bonds is conducive to maintaining the world financial order, maintaining its status as an international currency, and preventing excessive demobilization of the world financial system. At the same time, China's voice and voice in international affairs will also be greatly enhanced.
There is competition between China and the United States, but there is also cooperation and complementarity.
The relationship between China and the United States has always been complex and diverse. Although there are great contradictions between China and the United States in terms of economy and technology, there is also some room for cooperation and complementarity between China and the United States.
First of all, China and the United States have a very close economic and trade relationship. The economic and trade relations between China and the United States are very close, and the two sides have extensive cooperation in the economic and trade fields. China cannot develop independently of the international market, and the United States is China's largest partner and the most potential partner in science and technology. China and the United States share common interests, which makes it possible to develop bilateral relations.
Second, China and the United States share the same problems in international management. China and the United States have the same stakes and responsibilities in addressing climate change, counterterrorism cooperation, and advancing reform of the global financial system. The two countries should further cooperate in these areas and contribute to the reform and improvement of the international governance system.
China's strategic considerations for the way forward.
China's increase in U.S. debt is not a whim, it has its own set of strategic considerations, as well as its own considerations for its future direction.
First of all, China wants to maintain a relatively stable international background so that it can maintain steady economic growth within its borders. The stability of the U.S. bond market is necessary for China's export-oriented economic development. To this end, China should respond actively to maintain the smooth operation of the international financial system and maintain the trust of international, domestic and international markets.
Second, in order for China to make greater progress, it must have a good external condition in order to achieve better development and achieve better development. At present, China's economy has shifted from a period of rapid development to a period of high-quality development. During this period, China must continue to push forward reforms, bring in foreign capital, and improve its international competitiveness. Therefore, China should maintain an open and stable international economic environment conducive to its own development.
Fourth, China is reforming its own financial system to align with international standards. At present, China is steadily promoting the opening up of the capital account and the internationalization of the renminbi. During this period, maintaining an appropriate number of U.S. bond holdings will play a solid role in China's monetary policy, and will also play a strong supporting role in the opening up of China's capital market.
Therefore, China's increase in its holdings of U.S. bonds is not only a consideration for maintaining the security of the world economy, but also a need for China's long-term development. As far as China is concerned, it has both cooperation and confrontation with the United States, and increasing US debt is also conducive to maintaining a relatively stable world pattern and ensuring that its own interests are protected to the greatest extent. However, this does not mean that China will bear the responsibility for the Sino-US conflict for the United States. From China's point of view, protecting its own development and national interests has always been the top priority.
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