“Japan and China tend to agree on very little when it comes to economic strategy, geopolitics or managing Western idiosyncrasies. Yet Joe Biden is bringing Tokyo and Beijing together on one issue: their combined US$2.4 trillion of US Treasury debt holdings that are now suddenly in doubt.”
https://asiatimes.com/2022/03/us-sanctions-threaten-to-backf…
Where are they going to put $2.4 trillion? The problem for creditor nations is the lack of dollar alternatives.
<<Where are they going to put $2.4 trillion? The problem for creditor nations is the lack of dollar alternatives.>>
You are correct. So the process will be gradual with the possibility of sudden accelerations. With Chinese economy and foreign trades continue to grow, trust on its currency will also grow. Chinese currency would be one of the alternatives, but that requires China to make large amount of its currency available outside the country and also loosen the flow.
" Where are they going to put $2.4 trillion? The problem for creditor nations is the lack of dollar alternatives."
spot on.
With Chinese economy and foreign trades continue to grow, trust on its currency will also grow. Chinese currency would be one of the alternatives
Not unless China a bastion of capitalism. Look at what’s happened to BABA and BIDU as a result of CCP policies. The world is stuck with the dollar like it or not.
… Becomes a bastion …
<<Not unless China a bastion of capitalism. Look at what’s happened to BABA and BIDU as a result of CCP policies. The world is stuck with the dollar like it or not.>>
The main concern for those holding a currency is whether it will lose value or not. Chinese currency has been very stable during recent stock crash.
The main concern for those holding a currency is whether it will lose value or not. Chinese currency has been very stable during recent stock crash
The way one holds currency in the tens or hundreds of billions is by buying government bonds or assets in the country issuing the currency. China is still committed to building socialism. I’m not sure I’d be willing to bet the national surplus on a big investment in Chinese assets.
<<The way one holds currency in the tens or hundreds of billions is by buying government bonds or assets in the country issuing the currency. China is still committed to building socialism. I’m not sure I’d be willing to bet the national surplus on a big investment in Chinese assets.>>
Almost all major countries have significant trades with China, the first step some would take is to settle trade in Chinese currency rather than USD, which makes no difference except the surplus. Some countries have already started doing that and the recent events will accelerate it, which would reduce the need for USD. Countries, businesses and even individuals are certainly looking at the risks, and sooner or later they will find some balancing acts.