China may not be very interested in buying U.S. Treasuries

Yakk

Golden Member
May 28, 2016
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Was reading this Bloomberg article and was wondering what place(s) are left in the world that would buy the U.S. debt, if not China?

https://www.bloomberg.com/news/arti...-china-tailwind-seen-fading-at-the-wrong-time

..

For the U.S., the specter of cooler Chinese demand comes at an inopportune time, with the Federal Reserve tapering its portfolio of Treasuries and Congress debating a tax-overhaul plan that could increase the federal deficit by $1 trillion over the next decade. The U.S. debt burden was already forecast to swell by $10 trillion in that period even before any tax changes.


“It puts Treasury in a tough spot,” said Thomas Simons, a senior economist at Jefferies LLC in New York. “We have two very big domestic forces putting pressure on the market, and at the same time, our biggest global subsidy is pulling back.”


China owns almost $1.2 trillion of U.S. government debt, more than double the level from a decade ago. The bulk of the buildup came as the Chinese boosted foreign-exchange reserves to help offset a strengthening yuan.
..
 

whm1974

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Jul 24, 2016
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So it is looking like cutting taxes right now isn't a good idea at all then.
 

bbhaag

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Jul 2, 2011
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I am unsure what China hopes to accomplish by doing this. I thought it was pretty well understood that they buy our debt and we buy their cheap shit.
 

JSt0rm

Lifer
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I am unsure what China hopes to accomplish by doing this. I thought it was pretty well understood that they buy our debt and we buy their cheap shit.

once their middle class is established they don't need us to buy cheap shit. They play the long game. We play the game of short term gains.
 

bbhaag

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I was under the impression that China doesn't have a middle class and won't for a very long time. The commies in charge sealed their fate when they shook hands with Nixon back in the '70's.
 

1prophet

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Aug 17, 2005
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once their middle class is established they don't need us to buy cheap shit. They play the long game. We play the game of short term gains.


This, and our so called enlightened liberals in the tech industry continually compromise the very ideals they like to point the finger at conservatives over such issues like net neutrality and other privacy issues as well as other freedoms but rationalize them away for profit in China by hiding behind local laws so their gravy train won't be derailed.

Apple’s hypocrisy on iPhone privacy and civil liberties
https://hotair.com/archives/2017/11/21/apples-hypocrisy-privacy/
So China passed a law preventing people from using unregistered (unmonitored) VPN’s on their phones and Apple’s response is, ‘Hey, gotta obey local laws.’ Here’s Apple’s full response. It reads in part, “We are convinced that Apple can best promote fundamental rights, including the right of free expression, by being engaged even where we may disagree with a particular country’s laws.” But again, when a U.S. judge told Apple to unlock a dead terrorists’ phone, they said it was too dangerous to people’s privacy to even try.

Here’s Tim Cook back in February 2016 explaining the danger to people’s privacy. “This is not a position that we would like to be in,” Cook said. He continued, “To oppose your government on something doesn’t feel good. And to oppose it on something where we are advocating for civil liberties which they are supposed to protect, it is incredibly ironic.”
."

The same company that stashes hundreds of billions overseas to avoid taxes and aligns itself with social justice issues claims it's just obeying local laws,

No different than the northeners that profited from slave goods but liked to point the finger at southern states that had legalized slavery,

and if Apartheid South Africa was in the position that China is today economically, you can be sure these same corporate types would justify doing business there instead of divesting, because local laws.

The profit only matters mentality while morals and ethics take a back seat is the basic fundamental reason that America is on the decline and allows guys like Trump to get elected by offering some never reachable carrot at the end of a stick for the disenfranchised masses who end up suffering from these trickle-down, profit only matters rationalizations.



 

Exterous

Super Moderator
Jun 20, 2006
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Was reading this Bloomberg article and was wondering what place(s) are left in the world that would buy the U.S. debt, if not China?

The same people who are already buying the majority of our debt (Who are also the people who buy the hundreds of billions of US Treasuries when the yuan valuation swings)? China 'only' accounts for about 10% of our treasuries.
 

JSt0rm

Lifer
Sep 5, 2000
27,399
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This, and our so called enlightened liberals in the tech industry continually compromise the very ideals they like to point the finger at conservatives over such issues like net neutrality and other privacy issues as well as other freedoms but rationalize them away for profit in China by hiding behind local laws so their gravy train won't be derailed.

Apple’s hypocrisy on iPhone privacy and civil liberties
https://hotair.com/archives/2017/11/21/apples-hypocrisy-privacy/


The same company that stashes hundreds of billions overseas to avoid taxes and aligns itself with social justice issues claims it's just obeying local laws,

No different than the northeners that profited from slave goods but liked to point the finger at southern states that had legalized slavery,

and if Apartheid South Africa was in the position that China is today economically, you can be sure these same corporate types would justify doing business there instead of divesting, because local laws.

The profit only matters mentality while morals and ethics take a back seat is the basic fundamental reason that America is on the decline and allows guys like Trump to get elected by offering some never reachable carrot at the end of a stick for the disenfranchised masses who end up suffering from these trickle-down, profit only matters rationalizations.



How does any of that have anything to do with what I wrote?
 
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JSt0rm

Lifer
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I was under the impression that China doesn't have a middle class and won't for a very long time. The commies in charge sealed their fate when they shook hands with Nixon back in the '70's.

Missed this. You are crazy. They have 1.5 billion humans and right now 300 million are moving into the middle class. 300 million middle class! You better hope you work in a industry that has an export they want.
 
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1sikbITCH

Diamond Member
Jan 3, 2001
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So it is looking like cutting taxes right now isn't a good idea at all then.

Glorious Leader has handled high debt many times over his illustrious career as the World's Most Successful Businessman. Do not be afraid. He'll claim a loss and file bankruptcy. MAGA!
 

Yakk

Golden Member
May 28, 2016
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The same people who are already buying the majority of our debt (Who are also the people who buy the hundreds of billions of US Treasuries when the yuan valuation swings)? China 'only' accounts for about 10% of our treasuries.

But... China is also making it very unattractive for other places also :

https://www.google.ca/amp/s/www.cnb...one-dollar-rmb-denominated-oil-contracts.html

China is looking to make a major move against the dollar's global dominance, and it may come as early as this year.

The new strategy is to enlist the energy markets' help: Beijing may introduce a new way to price oil in coming months — but unlike the contracts based on the U.S. dollar that currently dominate global markets, this benchmark would use China's own currency. If there's widespread adoption, as the Chinese hope, then that will mark a step toward challenging the greenback's status as the world's most powerful currency.

China is the world's top oil importer, and so Beijing sees it as only logical that its own currency should price the global economy's most important commodity. But beyond that, moving away from the dollar is a strategic priority for countries like China and Russia. Both aim to ultimately reduce their dependency on the greenback, limiting their exposure to U.S. currency risk and the politics of American sanctions regimes.

Looking like a very well planned multi-faceted financial move if China is successful in removing the USD petro-dollar status while at the same time limiting the US's ability to attract money to finance a massive debt (total and per capita), while at the same time devaluing the allure of the USD to others.

The implications are looking to be huge here.
 
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DaveSimmons

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Aug 12, 2001
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US assets will still be attractive because of the lower levels of corruption. With Chinese assets you're at the mercy of a court system that heavily favors their nationals and their national interests over the rule of law, and where bribery is at much higher levels than even Ajit Pai would accept.
 

JSt0rm

Lifer
Sep 5, 2000
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US assets will still be attractive because of the lower levels of corruption. With Chinese assets you're at the mercy of a court system that heavily favors their nationals and their national interests over the rule of law, and where bribery is at much higher levels than even Ajit Pai would accept.

its a good point. China has a lot of work to do in this area. But country to country they will destroy us in any STEM game.
 

Exterous

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Jun 20, 2006
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But... China is also making it very unattractive for other places also :

https://www.google.ca/amp/s/www.cnb...one-dollar-rmb-denominated-oil-contracts.html



Looking like a very well planned multi-faceted financial move if China is successful in removing the USD petro-dollar status while at the same time limiting the US's ability to attract money to finance a massive debt (total and per capita), while at the same time devaluing the allure of the USD to others.

The implications are looking to be huge here.

You can find articles claiming China is going to unseat the USD as the petro-dollar, worlds reserve currency etc going back quite a few years at this point. Its unlikely to happen anytime soon for several reasons:
1) The Yuan still basically pegged to other currencies and China has shown its not against changing how it pegs their currency for their own motives
2) Heavy handed and incredibly nationalist focused market intervention. For example China has shifted around rules on moving money in and out of the country to suppress market pressures on their currency.
3) Lack of Central Bank cooperation with other Central Banks and swap lines (Which is a pretty huge deal)
4) Lack of buying in Yuan fixed income markets
5) Not even China conducts the majority of their trade in Yuan. They do more trade in the Yen and the Canadian dollar than the Yuan.
 

Genx87

Lifer
Apr 8, 2002
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its a good point. China has a lot of work to do in this area. But country to country they will destroy us in any STEM game.

Yeah? Lots of innovation coming out of China these days? They lack IP law and any innovation is owned by the state. Until they fix this they will always be a step behind and the worlds factory. Nobody is going to innovate so some corrupt govt official can get rich.