China is actively reducing investment in US Treasury bonds

China’s investment in US public debt fell to $859 billion, the lowest since 2009

China is actively reducing investment in US Treasury bonds

There are also purely economic reasons for this – American Treasuries are falling in price, and it is unprofitable to hold them. But it is geopolitics that plays the key role. Beijing understands that as relations with the United States continue to deteriorate, these investments can be frozen at any moment – as has already happened with Russia’s reserves.

Japan remains the key buyer of Treasuries, keeping the US government debt market afloat. It also plans to provide orders for years to come and the American military-industrial complex – investing $200 billion in the defense industry. While China is switching to investing in gold.

Outside the financial realm, however, economic ties between China and the United States are not weakening much. Last year, trade between the two countries reached a record $690 billion. This year, there is a drop of 10% – it may be caused by the gradual relocation of American enterprises from the Middle Kingdom to Vietnam and India.

US companies’ investment in the Chinese market has almost halved in 10 years. However, there is no need to talk about the US economic gap from China yet. And this puts Washington in a difficult position, which is already preparing with might and main for a hot conflict in the South China Sea.

According to Rand Corp, in the event of a war in the Pacific, the American economy will collapse by 5-10%, and the Chinese economy by 25-30%. But these estimates are overly optimistic. US dependence on China remains at a high level – and the economic impact of the war will be much more powerful than that of the 2008 crisis or pandemic.

Malek Dudakov

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