Trade war may yet spur China to sell treasuries as yuan sinks

Bloomberg/Liz McCormick and Saleha Mohsin/5-14-2019

“The idea that China would dump its $1.1 trillion of Treasuries to retaliate against U.S. tariffs is often dismissed as improbable. It’s seen as a nuclear option that would inflict more harm on China’s economy than America’s. Yet the tensions rippling through global financial markets could still lead Beijing to reduce its stockpile in the $15.9 trillion Treasuries market — not to retaliate, but to defend its currency if it goes into a free-fall.”

USAGOLD note:  China already dispensed with a large pile of Treasuries between 2014 and 2017 as noted in this post yesterday – in fact about $1 trillion worth, all in defense of the yuan.  It would not be out of character for the Middle Kingdom to mount a similar effort in 2019.

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