Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

China Dumps More US Treasurys

  by    0   2

China dumped more US Treasurys in April, selling off another $7.5 billion in US debt, according to the latest US Treasury Department data.  This follows on the heels of the biggest US Treasury selloff by the Chinese in nearly 2 1/2 years in March.

Over the last two months alone, the Chinese have dumped some $17.5 billion in US debt.

After a four-month pause, the big March sell-off resumed a trend of Chinese Treasury divestment we saw in 2018. Over the last 12 months, the Chinese have shed $69 billion of its Treasury securities.

China currently holds around $1.11 trillion in US bonds. The peak was $1.25 trillion in February 2016. The country remains the biggest US creditor. Even a long-term pause in Chinese bond purchases could become problematic for the US as it dumps billions of dollars of additional Treasurys on the market in order to fund ballooning deficits.

Last month, the federal budget deficit came in at $208 billion, according to Treasury Department data. It was the largest May deficit in history. The US government has to sell bonds to fund the deficits. If its biggest buyer continues as a seller, it could create significant problems for the Treasury Department in the near future.

There has even been talk that the Chinese could turn to a “nuclear option” in its trade war with the United States and aggressively sell off its holdings of Treasurys. This would raise borrowing costs for the cash-strapped US government and likely tank the dollar. The Chinese can’t out-tariff Trump. The US imports far more products than the Chinese. But that $1.11 trillion in Treasury holdings gives the Chinese significant leverage.

Most analysts believe it is highly unlikely that the Chinese would resort to the nuclear option because it would also potentially cripple their economy as well. But an editor for the Global Times, a Chinese state-owned newspaper, verbalized the threat in a tweet last month, saying “Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically.”

Even as the Chinese are shedding US Treasurys, they are buying gold. China added gold to its reserves for the sixth straight month in May and appears to be accelerating its rate of purchases.

This is all part of a broader Chinese strategy to minimize its exposure to the US dollar, and perhaps even to undermine the greenback’s status as the reserve currency. The Chinese have become more vocal about the need to create alternative payment systems globally that do not rely on the dollar. In an op-ed published this week, a Chinese state-owned newspaper called on the international community to find alternatives to the global dollar system and warned “capricious actions” by the United States government could “ruin the future of the dollar itself.”

Download SchiffGold's Gold vs GLD EFT's Guide Today

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Silver Demand Expected to Exceed 1 Billion Ounces in 2021

Every key area of silver demand is forecast to rise in 2021, according to the Silver Institute’s Interim Silver Market Review. The institute projects silver demand will come in at 1.029 billion ounces this year. That would mark the first year demand has exceeded 1 billion ounces since 2015.

READ MORE →

Jerome Powell 2.0

President Joe Biden has tapped Jerome Powell to serve a second term as chairman of the Federal Reserve. Biden said Powell’s “steady leadership” helped calm markets as governments shut down the economy due to coronavirus, and he expressed confidence in Powell’s future leadership. “I believe Jay is the right person to see us through,” Biden […]

READ MORE →

The Fed Pulled Off a Masterful Manipulation of the Junk Bond Market

The Federal Reserve pulled off a magnificent manipulation of the junk bond market, facilitated a massive wealth transfer from savers to speculators, pocketed millions of dollars, and then washed its hands of the matter. In March 2020, as governments shut down the economy for coronavirus, the Fed slashed interest rates and launched a massive quantitative […]

READ MORE →

Poland Plans to Add Another 100 Tons of Gold to Its Reserves

During a recent interview, Bank of Poland President Adam Glapiński said the central bank plans to add 100 tons of gold to its reserves in 2022. In 2018, the National Bank of Poland began aggressively adding gold to its reserves. Through the first half of 2019, the Polish central bank added more than 100 tons of […]

READ MORE →

The Fed’s Artificially Low Interest Rates Are Eating Away at Social Security

The Federal Reserve has held interest rates artificially low for decades. This causes all kinds of distortions and misallocations in the economy. And it’s creating quite a problem for the Social Security Administration.

READ MORE →

Comments are closed.

Call Now