UNITED STATES (VOP TODAY NEWS) — The tension in US-China relations is likely to push Beijing to reduce its investment in US debt, according to Bloomberg.
Chinese authorities could reduce their investments in US debt and hit the dollar hard not to take revenge on the United States, but to protect their national currency as the trade war between Washington and Beijing increases, he said. Bloomberg agency.
Speculation that US Treasuries could play the role of weapons in the US-China trade war came after a Chinese reporter posted a message on Twitter. According to the journalist, his country’s experts are studying this scenario since negotiations between the United States and China are deadlocked.
“The assumption that China can get rid of its 1,100 billion US treasury bills in response to higher tariffs in the US is often unrealistic. It is considered an extreme measure that will hurt the Chinese economy more than the US,” notes Bloomberg.
But in May, the yuan fell 2.6% to about 6.92 yuan, the lowest since December 2018. According to the agency’s experts, it is unlikely that China will accept a massive devaluation.. and uncontrolled yuan that could lead to capital flight and accelerate the fall of the yuan.
China, the largest creditor in the United States, has already sold bonds to support its national currency. In 2016, when the yuan lost nearly 7% of its value, Beijing reduced its portfolio by about 15%, selling treasury bills for $ 188 billion.
A new episode of the Sino-US trade war began in early May, after the passage of 10% to 25% of US customs tariff on $ 200 billion of Chinese products, or 40% of imports from China to the United States . Beijing responded by introducing additional tariffs affecting $ 60 billion worth of US goods.
Donald Trump and Xi Jinping are expected to hold a meeting at the end of June in Osaka as part of the G20 summit. According to media reports, the US President said he hoped his interview with his Chinese counterpart would be helpful in unblocking the trade talks between Washington and Beijing.
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