Today AOL posted an interesting article on how China could possibly use it's US bond holdings as a weapon against the US. Lately tensions between the US and China have increased, after the US sold to Taiwan a $6.4 billion arms sale. As a response some Chinese military members have advocated that China's U.S treasury bond holdings can be used as a weapon against the U.S. The People's Republic of China has $755 billion in treasury bonds. If China started to pull out in their U.S investments, it would severly shatter the U.S economy, quite possibly completely bankrupting it.
But the truth is that the U.S and China have too strong of an economic bond. If China pulls out its investment here, they will also plummet into a dark economic storm. A flooded market would greatly decrease the value of China's remaining holdings. Also the demand of Chinese products in the U.S, which is what gives China its economic power, would decline greatly if not, totally killing any demand. Basically, China would severely disable our economy, but doing so they would bring theirs down as well. So the possibility of China ever using their U.S treasury bonds as a weapon against us is highly unlikely. But it is interesting on how much power China really does have over us.
To read the article on this go to: http://www.dailyfinance.com/story/will-china-weaponize-u-s-debt-after-arms-sale-to-taiwan/19373579/?icid=mainmaindl4link3http%3A%2F%2Fwww.dailyfinance.com%2Fstory%2Fwill-china-weaponize-u-s-debt-after-arms-sale-to-taiwan%2F19373579%2F
But the truth is that the U.S and China have too strong of an economic bond. If China pulls out its investment here, they will also plummet into a dark economic storm. A flooded market would greatly decrease the value of China's remaining holdings. Also the demand of Chinese products in the U.S, which is what gives China its economic power, would decline greatly if not, totally killing any demand. Basically, China would severely disable our economy, but doing so they would bring theirs down as well. So the possibility of China ever using their U.S treasury bonds as a weapon against us is highly unlikely. But it is interesting on how much power China really does have over us.
To read the article on this go to: http://www.dailyfinance.com/story/will-china-weaponize-u-s-debt-after-arms-sale-to-taiwan/19373579/?icid=mainmaindl4link3http%3A%2F%2Fwww.dailyfinance.com%2Fstory%2Fwill-china-weaponize-u-s-debt-after-arms-sale-to-taiwan%2F19373579%2F
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