Will China Cash-In?

vgkg Z-7 Va(Z-7)

Any economists here....or not? What would happen here if China cashed in on it's $1 trillion of our outstanding Fed debt? Xi doesn't appear scared of trump's tariffs, this a is trump card he could play but not sure of it's effect. Interest rates pop? Stock market plunge (more)?

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vgkg Z-7 Va(Z-7)

I can understand why no one even wants to think about this.

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sunflower_petal(5a)

I really don't know if that is even possible to be honest.

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patriciae_gw(07)

Japan owns almost as much. I don't believe they can call in the so called loans(they are treasuries I believe) but they can sell them. That would affect the interest and value of all such debt instruments in ways I don't have a clue about. It would be a cut off your nose to spite your face thing though for China. They could chose to do it though.

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petalique

China has a lot of power over trump. Perhaps they have already signaled how they will work things (they’d love the fool at the helm for another turn). China has a strategy and plays the long game. Djt cannot hold two thoughts together. He aims only towards the next (“future”) five minutes and heaps of proffered adoration, ‘loyalty,’ and love letters.

MIT students could make a robot to gratify him.

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palisades_

China has a worry of its own. Since the tariffs started in 2018, its currency has been down nearly 7% against the dollar, making Chinese import goods less expensive, and somewhat offseting the tariffs China imposes. The trade imbalance between US-China is so huge. China would find no more tariffs after $60 billion worth of US goods, while the US can still impose more tariffs on Chinese goods, after the tariffs of $200 billion worth of Chinese goods. US economists will be looking closely at inflation indicator to access the damage from this trade war.

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vgkg Z-7 Va(Z-7)

Thx for your thoughts. China "owns" about $1.2 billion of our debt. Since trump is subsidizing US farmers with 10's of billions to make up for his tariffs then China might cash-in, Billions, to also subsidize their industries that will be hurt too. Not sure how it works (no economist) but seems logical to do so?

Also, on China stealing/copying US corps secrets/patients/intellectual property, etc, if they agree to stop doing this would not the price of these things/products increase back here since cheaper knockoffs will no longer be available from China? Stopping China from doing this sounds all well and good for US corps but will US consumers end up paying the price rather US corps?

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sunflower_petal(5a)

I think China knows they only have about 18 more months to go with this. Once a new US President is elected, they can get back to reasonable negotiations.

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jerzeegirl(9b)

It depends on if their loan document has an acceleration clause. If it does, then the Chinese can call the entire loan for any default. Are the loan documents between the US and China available for public perusal?

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Kitchenwitch111

I think China knows they only have about 18 more months to go with this. Once a new US President is elected, they can get back to reasonable negotiations.

China just might decide who they would like to have elected and help out with that. And that should be just fine with everyone because there's nothing illegal or criminal about getting help from a foreign country, right, Trumpers?

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bob_cville

> Thx for your thoughts. China "owns" about $1.2 billion of our debt.

I thought is was more on the order of $1.2 trillion

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patriciae_gw(07)

China owns US Treasury bonds. I think they have a set life? You can sell them before the due date though. I am speaking through my hat though. I only have a vague understanding of debt at that level. I know most of it is owned by us. Still other countries buy them for a host of different reasons. Us going bankrupt would be a bad thing for them.

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vgkg Z-7 Va(Z-7)

I thought is was more on the order of $1.2 trillion

Ugh, absolutely Bob!

Us going bankrupt would be a bad thing for them.

That 1.2 trill is about 5% of our total debt so not enough to bankrupt but a sign of weakness that would not be good for US. Just add another trillion to the debt to replace that trillion? Crazy daze. This must be on China's plate if things go down hill from here.

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palisades_

China owns US Treasury bonds. I think they have a set life? You can sell them before the due date though.

Bonds have set maturity dates. You can sell them before the due date but you only get a fraction of the gain. Other countries would not want the US to fail financially.

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