China prepares to give economic shock to US by selling holdings in the US Treasury bonds

Washington – The United States’ massive trade deficit with China in trade war cannot be allowed to continue, US President Donald Trump emphasized once again. Against the backdrop of the raging trade war between both countries, the statement made by Trump during the conclusion of the last round of their trade talks assumes significance. However, this time, China also seems to be taking steps to shake the United States, and so has decided to use its huge investment in the US bonds as a weapon.

China being the largest investor in the US Treasury securities, is now on a bond-selling spree. Accordingly, Beijing has started selling the US bonds for the last few months. China owned nearly $1.4 trillion of US bonds in total, the number of which has slashed to $1.12 trillion. By liquidating the treasuries, China is making evident to the United States that it could pursue an aggressive policy in the trade war. After US President Trump triggered the trade war by imposing tariffs on the imports of Chinese goods, China had warned the US of using investments in the US treasuries as a weapon.

Therefore, the withdrawal of China’s investments in the US bonds is no ordinary phenomenon at all but indicates of it being used as an economic weapon used against the US. If the United States refuses to back down in the trade war and continues targeting the import of Chinese goods, China will not stop short of posing a challenge before the US economy with the sale of the US bonds. This will likely intensify the trade war between the United States and China.

The US had previously conveyed China that if it resorts to any audacious decisions regarding the US bonds, the United States would be free to find a similar alternative. Rather, it is claimed that the Trump administration was seemingly prepared for such issues way before the trade war kicked off. This is apparent from the recent statements made by President Trump. “Till today, China has reaped profits of nearly $500 billion per year from the bilateral trade. This will not be allowed henceforth,” said President Trump, adopting a resolute stand of not changing policy towards China.

Talks between the United States and China to resolve the trade war are underway. Although President Trump has expressed satisfaction over it, he also said that the talks have failed to achieve expected progress. The picture would be entirely different if the talks become successful. But China at this phase is not ready to accept the recommendation put forward by the United States and instead is trying to retaliate against the US trade pressure by selling the US bonds. Earlier, Russia too had attempted to jolt the United States by liquidating its investment in the US bonds to a great extent.

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