Debts to China

Submitted by ub on

If China wanted to economically injure the U.S. by selling off its debt securities, the result could be dramatically higher interest rates and a steep dollar devaluation. But the Chinese would also shoot themselves in the foot. The Chinese have nearly half their cash reserves invested in U.S. debt  Davidson. For China, it's the safest, best investment the growing nation can make. China's economic growth is fueled partly by the return on their U.S. investment. Poisoning the dollar would take the yuan right down with it.

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