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"Whatever else is wrong structurally with China, its statist economic model has lifted a lot of its population out of poverty. Unfortunately, it also appears to have bred a lot of corruption. One other thing to keep in mind is the amount of US sovereign debt owned by China. It could, in theory, crash the USA by dumping that debt on the market. The $ crashes and US goes into recession. Harmful to China, yes, but catastrophic to the US. The "nuclear option" in Trump's war-without-bullets with China. Most of the debt China has is in treasury bonds which can't simply be called in. They pay out on a specific date for a specific amount. China could sell these bonds on the open market but if they dump them all at once they'll get less than they paid, while another nation will get the ability to call in the bonds by waiting. It simply gives free money to another nation. The other debt China holds they could call in, but one of two scenarios would play out and neither is good for China. The first scenario is that they call in the debt, the US creates more money, and pays it. This results in a spike in inflation which means the Chinese debt they just called in is worth less. Additionally, China no longer has any US debt to back their currency. All nations with fiat currency essentially back their money with the debt of other nations, this means that the more debt from everyone else you're holding on to, the more your money is worth. By calling in the debt they not only lose value in inflation but devalue their own currency as well. The second scenario is that the US responds by calling in their debt with China. It doesn't get published very often but the US holds somewhere between 700 and 750 billion in Chinese debt. As far as debt:GDP ratio goes the US is the creditor in the relationship even though China hold slightly more than that in US debt. If the Chinese call in the 1.15 trillion the US owe, the US call in the 750 billion China owes, and now China only get 400 billion. In exchange there is no longer any economic link between the two countries. Both get a weakened currency and suffer a slowdown in economy. Foreign investment in China stops and their already precarious economic position collapses. Neither scenario is good for China. " | |||
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"incharge " I think they'll settle for determining the way things go in the Eastern Hemisphere - and the USA will let them because it suits them both. No war, no wrecked economies and a giant slice of the pie each. | |||
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"incharge I think they'll settle for determining the way things go in the Eastern Hemisphere - and the USA will let them because it suits them both. No war, no wrecked economies and a giant slice of the pie each." And what about us plucky Brits?  | |||
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"And what about us plucky Brits? "Still America's favourite poodle. | |||
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"Whatever else is wrong structurally with China, its statist economic model has lifted a lot of its population out of poverty. Unfortunately, it also appears to have bred a lot of corruption. One other thing to keep in mind is the amount of US sovereign debt owned by China. It could, in theory, crash the USA by dumping that debt on the market. The $ crashes and US goes into recession. Harmful to China, yes, but catastrophic to the US. The "nuclear option" in Trump's war-without-bullets with China. Most of the debt China has is in treasury bonds which can't simply be called in. They pay out on a specific date for a specific amount. China could sell these bonds on the open market but if they dump them all at once they'll get less than they paid, while another nation will get the ability to call in the bonds by waiting. It simply gives free money to another nation. The other debt China holds they could call in, but one of two scenarios would play out and neither is good for China. The first scenario is that they call in the debt, the US creates more money, and pays it. This results in a spike in inflation which means the Chinese debt they just called in is worth less. Additionally, China no longer has any US debt to back their currency. All nations with fiat currency essentially back their money with the debt of other nations, this means that the more debt from everyone else you're holding on to, the more your money is worth. By calling in the debt they not only lose value in inflation but devalue their own currency as well. The second scenario is that the US responds by calling in their debt with China. It doesn't get published very often but the US holds somewhere between 700 and 750 billion in Chinese debt. As far as debt:GDP ratio goes the US is the creditor in the relationship even though China hold slightly more than that in US debt. If the Chinese call in the 1.15 trillion the US owe, the US call in the 750 billion China owes, and now China only get 400 billion. In exchange there is no longer any economic link between the two countries. Both get a weakened currency and suffer a slowdown in economy. Foreign investment in China stops and their already precarious economic position collapses. Neither scenario is good for China. " Who do you think has the upper hand in all this? Economically, not militarily. | |||
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