China could collapse the dollar and the American securities market – having sold the lion’s share of the US debt, which is in the hands of Beijing. This apocalyptic scenario of confrontation between the two most powerful economies in the world painted edition of South China Morning Post (SCMP). We asked the experts how real it is.
the Reasons for this development, as predicted by SCMP, there – and very real. In fact, Beijing holds in his hands (or rather, in the reserves of its National Bank) “Kashcheev needle” in the form of bonds, fed by the impressive amount of $1.12 trillion. For more than 10 years it remains the largest foreign creditor to Washington. This is due to the rigid orientation of the Chinese economy on exports and long-term surplus in trade with the United States.
With the world’s largest – more than $3 trillion – dollar reserves, China is investing a substantial portion in U.S. government bonds, whose yields are higher than, for example, government bonds of Germany or Japan. Therefore, theoretically a “perfect” moment Beijing may bring Washington the whole debt to be paid with the same consequences, about which the press writes.
But in reality, Beijing is selling U.S. treasuries, not often and in relatively small doses – for the sake of maintaining the yuan. Alternatives from Chinese financial authorities in General, no: now the Chinese economy continues to slow, the key macroeconomic indicators are declining. In this situation, trade-diplomatic conflict with the long-time “sworn friend” gives rise to additional risks. The national currency went down to around 7 yuan to the dollar, which is not exceeded in 2008.
“Such horror stories, like the SCMP, are constantly, says Professor, faculty of world economy and policy HSE Alexei Portansky. But there is no smoke without fire: China does possess a powerful potential lever of influence on America, and experts consider it. At the same time, China is aware of all the negative, including for themselves, the consequences of such a radical step as a rejection of the bonds the fed”.
In recent years Beijing has followed in foreign policy is ultra-cautious of course, trying to avoid even the most miniscule risks. For example, in a trade deal with the United States, which entered into force on 14 February 2020, he has gone on serious concessions, because it had financial problems and could not afford to operate from a position of strength. Accordingly, in the opinion Portansky, a publication of SCMP does not reflect the official position of the Chinese leadership, this is merely a journalistic attempt to intimidate the administration of President trump.
If in this context to remember about Russia, then it is a hypothetical collapse of the dollar is not profitable absolutely. Our country exports oil, which is still a bargain��is in dollars. If the us currency something happens, then what are we going to get the revenue?
by the Way, in recent years, the Russian monetary authorities have gradually reduced the proportion of “American” in the holdings of the Central Bank and increase the share of other currencies – particularly the Renminbi. However, when it comes to the procurement of import, it is necessary in any case to have the dollars and euros that have to be purchased in the market.
“Right now I’m looking at the website “Global Times”. This respected English-language newspaper reflects the position the nationalistic part of the Chinese establishment, – told the “MK” scientist-orientalist Yury Tavrovsky. So, the publication writes that the us debt can not be touched in any case, since it is huge, and the market will still fail to bring down. In addition, the current macroeconomic circumstances, Beijing will not be able anywhere to place such a large sum”. So it will be the crossbow, complete madness, sums up Tavrovsky.
the Idea sounds impressive, but no more. Even Chinese nationalists do not consider such a scenario of “revenge Trump” seriously. Discreet review “Global Times” on the fate of bonds the U.S. Federal reserve, according to the interlocutor of “MK”, speaks volumes. This newspaper, which likes to “brandish the sword”, in an editorial of 8 may said: China needs to have a thousand nuclear warheads and a hundred Intercontinental missiles for their delivery to the destination.
Apparently, the presence of such arms to China seems to the authors a more realistic perspective than the “peaceful” selling US debt.