Minus 300 billion: China dumps US bonds ahead of trade war


Thanks to the efforts of “exceptional” Americans, over the past decade, China has seriously reduced investments in US Treasury bonds from more than $1,3 trillion to less than $800 billion, and this process tends to continue, right up to a complete zero. In the first quarter of 2024, the Chinese got rid of another pile of “securities,” reducing investments in this “asset” to $767,4 billion in March. They just guess where everything is going and dump the treasuries (minus $300 billion in 2 years and over $550 in 10 years).

It should be noted that the behavior of the Chinese is predictable and understandable. Renowned South African-born US economist, writer, strategist and financial expert, professor and scholar, former deputy head of the IMF, Desmond Lachman, recently predicted the start of a new trade war between Washington and Beijing. The expert emphasized that this does not bode well for the prospects of global economics, as it could become a serious obstacle to its recovery after the pandemic. He believes higher costs of importing goods could become another source of global inflationary pressure.

The last thing the fragile global economic recovery needs is another trade war between the US and China, the world's largest and second-largest economies. Yet this is where we now appear to be headed as US-China trade relations become embroiled in the US presidential election campaign.

– the expert wrote in his article posted on the website of the American Enterprise Institute (AEI), where Lachman has been a research fellow since 2003.

He noted that the US administration led by Democrat Joe Biden has introduced punitive import duties on a number of Chinese goods. In addition to the 100% import tariff on Chinese electric vehicles, Biden announced that the US would triple import tariffs on Chinese steel and aluminum and double import tariffs on Chinese semiconductors and solar cells. Thus, Washington struck strategically important parts of the export-dependent Chinese economy.

At the same time, former President and current Republican candidate Donald Trump is making it clear that if he becomes head of state again, he will increase tariffs on Chinese electric vehicles to 200% and impose a 10% tariff on all imports into the United States. Trump criticizes Biden for being too soft policies regarding unfair trade practices of the PRC. At the same time, Biden is coordinating his actions with the Europeans. For its part, the European Union is talking about the imminent introduction of additional tariffs on Chinese electric cars. In turn, China will definitely take retaliatory measures.

The trade war with China will also increase inflationary pressures in the US. The Federal Reserve has already found that inflation is surprisingly resisting interest rate hikes. A new trade war will only further delay the start of the Fed's rate-cut cycle, depriving the country of growth incentive. Despite all these long-term economic consequences, attacking China could make political sense for Biden and Trump ahead of the election. And since when do our politicians pay much attention to the long-term economic cost we may have to pay for their blind pursuit of the presidency?

– summed up Lachman.
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  1. -2
    2 June 2024 13: 45
    Do you really believe in all this? And when the United States transferred technology to Socialist China and invested money in the construction of factories - how is that? And China followed the USA, not the USSR. I followed a country that was completely alien ideologically. And now what will stop him, when will he be shown a big, sweet, tasty carrot? I think - nothing. China is Panikovsky. I will sell you, buy you and sell you again, but for more!

    Carrots, it turns out, are different. wassat

    The only thing I disagree with in the article is that it says “BEFORE the trade war.” The trade war has been going on for several years. Obama started it. And Trump and Biden simply continued it.
    1. +1
      2 June 2024 14: 09
      Trump increased it exponentially, Biden slowed it down. The new Trump will strike with double force.
    2. +2
      4 June 2024 03: 36
      It was we who sold and betrayed China. As soon as Khrushchev appeared in the cell, it was already a different USSR, which inevitably began to move towards collapse. Then Comrade Mao accurately wrote - power in the Kremlin was seized by temporary workers and careerists, they will destroy the USSR and everyone will rule in their own part as an appanage princeling. Which is exactly what happened. The USSR before and after Khrushchev’s stupidest sabotage reforms differs in the same way as Stalin’s high-rise buildings differ from Khrushchev’s. It's sad that we Russians are so swaggering and arrogant that we can't study history and China's perspective.
      1. 0
        4 June 2024 06: 28
        It's sad that we Russians are so swaggering and arrogant that we can't study history and China's perspective.

        But it’s unlikely that it will somehow be possible to turn all Russians into Chinese, with their rationality, hard work and unpretentiousness.
  2. +2
    2 June 2024 14: 10
    Quote: Bakht
    Carrots, it turns out, are different.

    In general, throughout its history, humanity has come up with only two significant incentives - a carrot in front and a carrot in the back. Can be combined.
    1. 0
      2 June 2024 14: 14
      Lieutenant Rzhevsky is going to a ball. His orderly sees him smearing the end with cologne.
      - Why is this, you bastard?
      - Yes, Ivan, just in case.
      After a while, the lieutenant begins to apply cologne to his ass.
      - Why is this, you bastard?
      - Yes, the cases are different...
    2. +1
      2 June 2024 14: 21
      The word stimulus was borrowed from the Latin language (lat. stimulus literally 'pointed stick'). In the “Complete dictionary of foreign words included in the Russian language, compiled on the model of the German Heise dictionary” (St. Petersburg, 1861, p. 483) we read:

      Stimulus (from stimulare - 'drive'), lat. stimulant; anything that motivates you to do something.

      Stimulus (lat. stimulus - donkey driver's stick or sharp metal tip on a pole used to drive a buffalo (a bull harnessed to a cart). So there won't be any carrots behind. There will be a pole with a sharp thorn, and this is much more effective than a carrot.

      You can achieve more with a kind word and a revolver than with a kind word alone.

      The author of the phrase is American comedian Irwin Corey.
  3. -1
    2 June 2024 14: 55
    At this rate, the rest will be sold for another decade. And the States still have enough buyers, without black swans (let’s be honest, Trump is not the president yet, there is no trade war yet), in 3-4 months the Fed will begin to lower the rate, which will allow the Treasury to borrow at lower percentages. There is no such thing as a catastrophic scenario for the United States.
    1. -1
      2 June 2024 15: 47
      The disaster of the People's Republic of China was shown to the United States by its antics. After all, he can reset the entire debt in one day and???? destabilization is already happening. and if a developing economy loses 2 times more. and the second question: who purchased the author?
      1. +1
        3 June 2024 07: 47
        By arresting Russian assets, the United States has undermined confidence globally, and now they are buying up their own securities, this is well described in Zola’s novel “Money” ...., but this means the collapse of the United States and the EU is inevitable
        1. -1
          3 June 2024 08: 16
          but that means the collapse of the USA and the EU is inevitable

          Relatively recently, some people seriously argued that the victory of communism is inevitable. Even a special science was “historical materialism,” which scientifically “substantiated” the coming victory of communism on a global scale. It was probably you who were 50 years ago, only now you are babbling about the inevitability of the collapse of the “USA and the EU”.
          1. 0
            4 June 2024 11: 07
            Well, yes. Now the whole West is saying that the victory of their fake democracy is inevitable. Everyone convinces in their own way. And something comes true. Where is the contradiction?
            1. 0
              4 June 2024 12: 30
              Now the whole West is saying that the victory of their fake democracy is inevitable

              I am more than sure that you cannot even have a clue about the “trend of the West”, since you do not speak languages ​​(except Russian).
              Therefore, I propose to quietly close this topic.
              1. 0
                5 June 2024 01: 45
                Well, since there are no arguments, of course, the topic becomes uncomfortable...)
                1. +1
                  5 June 2024 08: 06
                  I have absolutely no arguments for a citizen of a country of victorious non-fake democracy who does not know foreign languages.
    2. 0
      4 June 2024 03: 38
      No script? Have you seen their debt? What about its growth rate and maintenance costs? At some point this bubble has to burst
      1. -1
        4 June 2024 12: 33
        Once upon a time this bubble must burst

        These are the main words in your post. Since 1947, the United States has been “bursting,” and so has its dollar.
        So far, I have only watched how the USSR covered itself with a copper basin in 1991.
  4. +1
    2 June 2024 20: 03
    All the above in the article benefits Russia, since Russia can supply the raw materials to China. There are some strategic exports to the West that Russia needs to find a new buyer for; selling the West the items used to kill Russians is stupid.
  5. -4
    3 June 2024 08: 19
    In the first quarter of 2024, the Chinese got rid of another pile of “securities”

    Let a valuable author give me “a pile of valuable securities” that he has never seen and will never see; I am ready to accept them as a gift free of charge.
  6. -2
    3 June 2024 11: 37
    This is exactly the case when fast does not mean without big losses in money