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1/5
Here we go again. I am not sure how credible a source Global Times is, but for Beijing selling US Treasuries isn’t the hard part. The hard part is what the PBoC does with the proceeds.
-If they buy other USD assets, then nothing has changed. https://www.scmp.com/economy/china-economy/article/3100307/china-may-ditch-us-treasuries-decoupling-risk-looms-global?utm_source=Twitter&utm_medium=share_widget&utm_campaign=3100307">https://www.scmp.com/economy/c...
Here we go again. I am not sure how credible a source Global Times is, but for Beijing selling US Treasuries isn’t the hard part. The hard part is what the PBoC does with the proceeds.
-If they buy other USD assets, then nothing has changed. https://www.scmp.com/economy/china-economy/article/3100307/china-may-ditch-us-treasuries-decoupling-risk-looms-global?utm_source=Twitter&utm_medium=share_widget&utm_campaign=3100307">https://www.scmp.com/economy/c...
2/5
-If they buy euro, yen, sterling, etc., they will unleash anger from these countries who will suffer disinflationary pressures as their currencies rise against the dollar, and who will have to absorb the consequent reduction in the US current account deficit.
-If they buy euro, yen, sterling, etc., they will unleash anger from these countries who will suffer disinflationary pressures as their currencies rise against the dollar, and who will have to absorb the consequent reduction in the US current account deficit.
3/5
-If they buy the currencies of developing countries, they take highly pro-cyclical credit risks that they have been actively trying to reduce.
-If they stockpile commodities, given how important Chinese growth is for commodity prices, they lock in a huge amount of...
-If they buy the currencies of developing countries, they take highly pro-cyclical credit risks that they have been actively trying to reduce.
-If they stockpile commodities, given how important Chinese growth is for commodity prices, they lock in a huge amount of...
4/5
volatility and more unwanted pro-cyclicality into their balance sheets.
-If they remain in RMB, of course, their currency will rise in value and their trade surpluses will disappear.
Over the short term Beijing is probably better off by reducing the threat of...
volatility and more unwanted pro-cyclicality into their balance sheets.
-If they remain in RMB, of course, their currency will rise in value and their trade surpluses will disappear.
Over the short term Beijing is probably better off by reducing the threat of...
5/5
Washington’s cutting it off from the USD system, but economically, and geopolitically over the longer term, the US benefits more than anyone else from a gradual Chinese reduction of USD holdings, which is why Washington should be pushing for this, not Beijing.
Washington’s cutting it off from the USD system, but economically, and geopolitically over the longer term, the US benefits more than anyone else from a gradual Chinese reduction of USD holdings, which is why Washington should be pushing for this, not Beijing.
