Chinese Economics Thread

kurutoga

Junior Member
Registered Member
Well, in highly unlike event of war between China and the US ... the US would simply seize it and/or would declare the treasuries held by China is void. And it has happened before

US can't identify those treasury bills held by China, among all treasury bills. They can't declare only the ones held by China being void, unless they declare all treasury bills void. If they do it, US government can't last for one month, since they need to sell treasury to get funding. There is massive consequences of US government losing its credit, this will basically be the end of US as a world power.
 

antiterror13

Brigadier
Its not that easy, the day US does that its the day US economy is over. Today the dollar and all currently are fiat, that means there is no intrinsic value backing the dollar, the value behind the dollar is the people's trust that US government is good for it.

When US declare a huge part of its money supply as null and void, what do you think the rest of the people who still holds the dollar going to do? People are going to dump it as crazy, people will be try to spend whatever dollar they have to buy as much hard asset as they can, then of course people with such assets will stop accepting the dollars as legal tender or dramatically increase the selling price base on dollar to offset the new risk (Hyper inflation). Before long dollar will ONLY work in United States itself, end of the dollar as world reserve currency, end of US empire. So no, US will not shoot itself in the foot by declare Chinese debt void

I am not suggesting it is easy at all ... but if the war broke (highly unlikely) ... anything could happen

do you remember what happened to Iran money/assets ? not quite the same but similar
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Remember that Trump once gave a hint would do that ... declare bankrupt and issue new US currency .. he did give that hint ... it means all the debt would be void .. and what are you going to do anyway?
 

antiterror13

Brigadier
US can't identify those treasury bills held by China, among all treasury bills. They can't declare only the ones held by China being void, unless they declare all treasury bills void. If they do it, US government can't last for one month, since they need to sell treasury to get funding. There is massive consequences of US government losing its credit, this will basically be the end of US as a world power.


Of course the US know which serial no are held by the Chinese govt or Japanese govt or other in very detail. Otherwise how the US know how much treasuries held by the Chinese Govt or Japanese Govt? how?
 

sanblvd

Junior Member
Registered Member
I am not suggesting it is easy at all ... but if the war broke (highly unlikely) ... anything could happen

do you remember what happened to Iran money/assets ? not quite the same but similar
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Remember that Trump once gave a hint would do that ... declare bankrupt and issue new US currency .. he did give that hint ... it means all the debt would be void .. and what are you going to do anyway?

There is a difference between 100 billion of Iran vs 3,000 billion that China holds. And besides Iran did something incredibly stupid by seize US embassy personal for like a year and made themselves the ISIS of the day, it received condemnation from the whole world including UN.

If a war happen between US and China, its unlikely things will be that straight forward and even more unlikely that US can isolate China.

This 2 is not comparable with each other.
 

kurutoga

Junior Member
Registered Member
Of course the US know which serial no are held by the Chinese govt or Japanese govt or other in very detail. Otherwise how the US know how much treasuries held by the Chinese Govt or Japanese Govt? how?

China may not necessarily purchase treasury bills during the auction, it can be traded in the secondary market. in fact, both China and Japan constantly buy/sell based on situations. And no, itis not like currency and there is no serial numbers. Think of treasury bills as stocks.

TBill is one of the fundamental asset classes in all sorts of investing, think your own 401k plans you may own some
 
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plawolf

Lieutenant General
Well, in highly unlike event of war between China and the US ... the US would simply seize it and/or would declare the treasuries held by China is void. And it has happened before

When has that ever happened before? Please give some real world examples.

What you are suggesting would simply be impossible to do unless the US wants to void its treasuries held by everyone.

Government treasuries are freely tradable. If I buy US government treasury bonds, my name doesn't go on those bonds and the same goes for China.

That makes it impossible for the US government to single out the bonds held by anyone in particular to be voided.

On practicality grounds alone that is a total non-starter. There is also the irreversible reputational and economic damage to even a hint of such a move would have on the US economy.

If America ever gets tired of being a superpower, voiding its treasury bonds would be a surefire way to make sure they loose their superpower status and power.
 

FactsPlease

Junior Member
Registered Member
I am not suggesting it is easy at all ... but if the war broke (highly unlikely) ... anything could happen

do you remember what happened to Iran money/assets ? not quite the same but similar
Please, Log in or Register to view URLs content!


Remember that Trump once gave a hint would do that ... declare bankrupt and issue new US currency .. he did give that hint ... it means all the debt would be void .. and what are you going to do anyway?

1. Freezing assets is very different from voiding all the treasure bills you sold on international market. I truly disapprove you equate two matters. So, NO, I don't think it (voiding treasure bill) happened before.

2. Will US dare to did it? I believe there is a chance, given:
1) this reckless POU - don't forget he just kick out a top strategist who (peopile said) is the only one in his team can think 2 or 3 steps ahead
2) with or without treasure bill serial, USA still hold dominating role in almost every international finance institute. E.g. it can demand (yes, demand. US did it quite oftenly) all finance blocks to stop trading treasure bills with China
3) The will and power to do this kind of thing marks a real superpower - I'm not saying you brand yourself by doing this. It's the other way around, you dare to it because you acknowledge all the price to retain a superpower position. Besides, the later you do it, harder and more harmful to you (I agree w/ Bannon that time is not on USA side if things go on current way).

3. Does China stand a chance if US turns in this reckless war? YES, China still hold a great market and its manufacturing base (though I don't buy it's so flawless as China is still importing more than half high-tech machine tools from West and Japan). While people is saying China's wage is soaring, per my experience in western China provinces, it is still "under-developed" that can take over industries at coastal. All it need is infrastructure, which China is pacing up. There are of course more: OBOR, China investment in high-tech.

It's about two things:
- Will to act: in case US is moving [threatening], China is taking the challenge or not? Don't forget the old Chinese saying: "Risk is another face of opportunity"
- Timing: is China ready? does it think it need more time?
 
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PiSigma

"the engineer"
1. Freezing assets is very different from voiding all the treasure bills you sold on international market. I truly disapprove you equate two matters. So, NO, I don't think it (voiding treasure bill) happened before.

2. Will US dare to did it? I believe there is a chance, given:
1) this reckless POU - don't forget he just kick out a top strategist who (peopile said) is the only one in his team can think 2 or 3 steps ahead
2) with or without treasure bill serial, USA still hold dominating role in almost every international finance institute. E.g. it can demand (yes, demand. US did it quite oftenly) all finance blocks to stop trading treasure bills with China
3) The will and power to do this kind of thing marks a real superpower - I'm not saying you brand yourself by doing this. It's the other way around, you dare to it because you acknowledge all the price to retain a superpower position. Besides, the later you do it, harder and more harmful to you (I agree w/ Bannon that time is not on USA side if things go on current way).

3. Does China stand a chance if US turns in this reckless war? YES, China still hold a great market and its manufacturing base (though I don't buy it's so flawless as China is still importing more than half high-tech machine tools from West and Japan). While people is saying China's wage is soaring, per my experience in western China provinces, it is still "under-developed" that can take over industries at coastal. All it need is infrastructure, which China is pacing up. There are of course more: OBOR, China investment in high-tech.

It's about two things:
- Will to act: in case US is moving [threatening], China is taking the challenge or not? Don't forget the old Chinese saying: "Risk is another face of opportunity"
- Timing: is China ready? does it think it need more time?
Talking about freezing assets, US have invested way more into China than the other way around. Any country that stop trade with China and seize assets will have theirs seized as well. Its lose lose for everyone. Especially when China is largest trading partner for literally most countries in the world, just not going to happen.
 
Tuesday at 7:54 AM
Yesterday at 10:11 PM

now I read
China expresses "grave concerns" about new U.S. memorandum
Xinhua| 2017-08-15 10:42:51
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now
U.S. formally initiates investigation of China despite worries about potential harms to bilateral trade ties
Xinhua| 2017-08-19 07:45:33
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U.S. Trade Representative (USTR) Robert Lighthizer on Friday formally initiated an investigation of so-called China's intellectual property practices under Section 301 of the Trade Act of 1974, despite worries about potential harms to China-U.S. trade ties.

"The investigation will seek to determine whether acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce," the USTR's Office said in a statement.

The move comes after President Donald Trump on Monday signed an executive memorandum directing Lighthizer to consider the possible initiation of an investigation.

China has urged the
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to objectively evaluate China's progress in protection of intellectual property rights (IPR) and resolve the differences with China through dialogue and consultation.

"The United States should treasure the current sound Sino-U.S. economic and trade ties and cooperation momentum. Any U.S. trade protectionism move will surely damage bilateral ties and the interests of companies from both countries," China's Ministry of Commerce said in a statement on Tuesday.

Section 301, once heavily used in the 1980s and the early 1990s, allows the U.S. president to unilaterally impose tariffs or other trade restrictions against foreign countries. But the United States has rarely used the trade tool since the
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came into being in 1995.

"It became no longer necessary really for the United States that they have to use that law, because now we have an effective dispute settlement system under the WTO," Chad Bown, a senior fellow at the Washington-D.C. based Peterson Institute for International Economics (PIIE), told Xinhua in a recent interview.

Meanwhile, "the legal timeline of the process under Section 301" doesn't work well with the rules of the WTO, said Bown, who previously worked as a senior economist in the
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Council of Economic Advisers and the World Bank.

Senior administration officials told reporters last week that the United States would first consult with China if Lighthizer decided to go ahead with an investigation, and the investigation process could take as long as a year.

Jeffrey Schott, another trade expert and senior fellow at the PIIE, told Xinhua that the purpose of the investigation is "to find out what the facts are and to use the process of investigation to expand bilateral consultations with China" so that there is a better understanding of each country's practices.

Schott didn't see "any immediate restrictions" being imposed on China by the United States as the USTR has to do "a lot more study" on this case.

"Whether there are restrictions or not will depend on how the study proceeds and how the bilateral consultations between the United States and China unfold over the next few months," he said.

If the U.S. side fails to respect basic facts and multilateral trade rules, and takes measures that harm bilateral economic and trade relations, "China will definitely not sit by, but take all appropriate measures to resolutely safeguard its legitimate rights and interests," warned China's Ministry of Commerce.

Michael Froman, former USTR under the Obama administration, has also warned that the United States could face retaliation by other trading partners, if the Trump administration moves away from resolving trade disputes through the WTO and instead starts taking unilateral actions.
 
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