Named powerful trump card China trade war


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The trump card of Beijing in confrontation with Washington after the next escalation of the trade war and the decision of the Chinese side to weaken the yuan becomes the us national debt. This writes CNN.

China is a major foreign creditor of the United States Beijing holds us Treasury bonds is $ 1.1 trillion. In theory, if China decides to take advantage of this fact and begin to sell us debt, it could lead to a sharp fall in the value of government securities and, as a consequence, increase the return on them is due to the increase in the riskiness of the asset. As a result, the cost of servicing the national debt for the United States will increase dramatically.

Meanwhile, the yield on Treasury bonds affect the cost of commercial and consumer loans. Therefore, the potential actions of Beijing also impact on corporate bonds, the cost of mortgages and car loans in the United States that will negatively affect the growth of the American economy.

“However, there are a number of important reasons why China will likely not pull the trigger. First, it just may not give the expected result. Secondly, it may also hit the Chinese economy,” writes CNN.

So, such a step will lead to the strengthening of the yuan, which is disadvantageous to China, which last week weakened the national currency, so as to put pressure on the U.S. to give their producers the advantage of being cheaper than the competitors product.

The people’s Bank of China this week lowered the rate of national currency to the dollar to the lowest level since 2008. After that, the U.S. has accused China of currency manipulation and threatened to appeal to the international monetary Fund (IMF). Meanwhile on 8 August, us President, Donald trump has expressed concern over the strengthening of the dollar, which, according to him, negatively affects the competitiveness of American companies.

Video, photo All from Russia.


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