Could China use US: The trade war between China and the United States has intensified, with both countries imposing the toughest tariffs on each other. China has clearly stated that it is ready to “fight to the last limit.”
Could China use US, This trade war is not limited to tariffs or exports, but has become a war to weaken each other in the economic field. In such a situation, China has a weapon that may prove to be more dangerous than traditional trade sanctions, and that is US debt.
According to Al Jazeera TV, China is currently the second-largest creditor of the United States, holding US Treasury bonds worth $760 billion. According to experts, China can sell this debt and reduce the value of the US dollar, which will have a major impact on the US economy.
This could increase US interest rates, which will affect investment and domestic spending. Economists have called this move the “nuclear option”.
However, this strategy could also hurt China because a weaker dollar would mean that China’s dollar assets would be worth less, while the yuan would appreciate, making Chinese exports more expensive.
Contrarily, the US Federal Reserve could use quantitative easing to counter this move. This would inject capital into the market to revive economic activity, with the US government buying its own bonds and trying to boost investment by lowering interest rates.
However, the daily changes in trade policy are making it increasingly difficult for US monetary policymakers to plan for the future. Consumers are also becoming increasingly anxious, and spending is being cut due to fears of financial instability.
US consumer confidence has fallen 11% since last month, a sign that public fear of the effects of the trade war is growing.