Name: Why China's US debt holdings Are Its 'Nuclear Option' In Trump's Trade War
Uploaded: 2019-07-10T02:38:53.000Z
Duration: 4 min 30 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

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has long complained that they're not treated

fairly by the Chinese that it costs too much to

And along with that the US does not charge enough

for Chinese products that come into the US.

Now this has been a topic of conversation for a

long time it's gone through multiple presidents,

through administrations, through many Congresses.

The thing is, nobody's ever really done very much

products when they've tried to dump certain

but nothing as strenuous and nothing as concrete

Now of course the Chinese have countered with

their own tariffs but their retaliatory measures

So the Chinese basically have three ways that they

One of course is that they can level their own

Of course the big one that comes to mind there is

miserable through a whole host of measures.

The third thing that they can do, and this is

what we call the nuclear option, is that they can

treasuries or they can actually start selling

Now the reason why this is such an important

thing and why we call it the nuclear option is

because China is the largest holder in the world

It's got over a trillion dollars, close to $1.1

bonds, notes, bills, those those sort of things.

Of course that's very important with the U.S.

running nearly trillion dollar deficits which are

expected to continue as far as the eye can see.

So if China is not a big player in that market it

could make life very difficult for the U.S..

The idea of China going to the nuclear option is

something that's been framed in the local media

there, which of course is its state-run media,

where they've talked about scholars studying this

Now that's a very calculated type of language

where they say, 'OK we're just going to study

It's basically saber rattling, is what it really

They want the US to know that this is something

Everybody knows that the chances of China doing

But as the dispute goes on and if the dispute

continues to go on, which it's likely to do, it

becomes more and more of a possibility where

China has to say look we can't match you dollar

obviously imports far more goods from China than

So if this continues to go on, if the stakes get

higher, if feelings continue to get hurt, it

becomes more and more of a viable possibility for

The big thing for China is that if it does take

this type of nuclear option it will not go

that. Because, look, China needs to hold U.S.

They're still the most liquid instrument in the

They have they carry a pretty decent yield on

And it would just generally cause a crisis of

confidence within the world that China is

So there is damage that could be done significant

damage to the Chinese economy if it would step

Now of course that doesn't mean they won't do it.

China is under a different political system than

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Why China's US debt holdings Are Its 'Nuclear Option' In Trump's Trade War

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