Why China’s US Debt Holdings Are Its ‘Nuclear Option’ In Trump’s Trade War


So the U.S. China trade dispute
is essentially about fairness. The U.S. has long complained that
they’re not treated fairly by the Chinese that
it costs too much to send American products
into China. And along with that the
US does not charge enough for Chinese products that
come into the US. Now this has been a
topic of conversation for a long time it’s gone
through multiple presidents, through administrations, through
many Congresses. The thing is, nobody’s ever
really done very much about it. There have been a
few measures here and there, some tariffs
on Chinese products when they’ve tried
to dump certain products into the U.S. but nothing as strenuous
and nothing as concrete and nothing as serious
as what the Trump administration has done
with the tariffs that it’s leveled
against Chinese goods. Now of course the
Chinese have countered with their own tariffs but
their retaliatory measures are somewhat limited
in scope. So the Chinese basically have
three ways that they can retaliate against
American tariffs. One of course is that
they can level their own tariffs and they
have done that. Number two is that they
can make it more difficult for U.S. companies to operate
in China. Of course the big one that
comes to mind there is Apple. It could really
make Apple’s life miserable through a whole
host of measures. The third thing that they
can do, and this is what we call the nuclear
option, is that they can either stop buying U.S. Treasuries or they can
actually start selling U.S. Treasuries back
into the market. Now the reason why this
is such an important thing and why we call
it the nuclear option is because China is the largest
holder in the world of US debt. It’s got over a trillion
dollars, close to $1.1 trillion dollars in U.S. bonds, notes, bills, those
those sort of things. And the U.S. counts on China to
buy up its debt. Of course that’s very
important with the U.S. running nearly trillion dollar
deficits which are expected to continue as far
as the eye can see. So if China is not a
big player in that market it could make life very
difficult for the U.S.. The idea of China going
to the nuclear option is something that’s been framed
in the local media there, which of course
is its state-run media, where they’ve talked about
scholars studying this issue. Now that’s a very
calculated type of language where they say, ‘OK we’re
just going to study this. We’re going to
look at this.’ It’s basically saber rattling,
is what it really comes down to. They want the US to
know that this is something that’s on the table. Everybody knows that the
chances of China doing this aren’t really good. But as the dispute goes
on and if the dispute continues to go on, which
it’s likely to do, it becomes more and more
of a possibility where China has to say look
we can’t match you dollar for dollar tariff
wise. That’s the big thing for
them, because the U.S. obviously imports far more
goods from China than the other way around. So if this continues to go
on, if the stakes get higher, if feelings continue
to get hurt, it becomes more and more of
a viable possibility for China to step in
and stop buying U.S. Treasuries or sell
them outright. The big thing for China is
that if it does take this type of nuclear option
it will not go unscathed, if it
does something like that. Because, look, China
needs to hold U.S. Treasuries. They’re still the most
liquid instrument in the world as far as
fixed income goes. They have they carry a
pretty decent yield on them. It also would
weaken the U.S. dollar, which would
make U.S. multinationals stronger. And it would just generally
cause a crisis of confidence within the world
that China is stepping away from
this market. So there is damage that
could be done significant damage to the Chinese economy
if it would step away from the market. Now of course that doesn’t
mean they won’t do it. China is under a
different political system than the U.S. President Trump and Congress,
they have to answer to the American people. The way the Chinese
government, the way their political system is set up,
President Xi does not have to answer on the
same level that President Trump does. So they can
go ahead and they can sustain a little bit of damage. Of course, China’s
economy is still a very strongly
growing economy. So they have a little
bit of wiggle room here, but not a whole lot.

91 thoughts on “Why China’s US Debt Holdings Are Its ‘Nuclear Option’ In Trump’s Trade War

  1. A NICE BIT OF DEEP STATE PROPAGANDA! WHEN CHINA AMASSES SUFFICIENT GOLD TO BACK THEIR CURRENCY, THAT WILL BE THEIR NUCLEAR OPTION TO TAKE OUT THE US FIAT DOLLAR!

  2. Who? Ever Moves To China Its an Idiot.. We Need To Stop Buying Chinese Products..

  3. Old news…..China, Russia, Japan all selling USA debt back. They're crashing the dollar!

  4. Trumps trade war will back fire and US economywill suffer. Trump will not be re elected. Trump has NO diplomatic skills to solve his own mess. US companies will leave America for profit anytime. China wont deal with Trump anymore.

  5. Lol not a whole lot of wiggle room? When you sanctioned them, they just started buying from others like Russia. They got the advantage obviously, they don't have unpayable trillions dollars of debt.

  6. The trade war is just a good excuse for Chinese to get rid of us debt and delink the unreliable USA. Thanks trump. Trump 2020.

  7. China held close to 4 trillions US debts few years back, and now is down to 1.2 trillions. Obviously China has been planning on moving away from the Dollar, and that is what hurting USA. It's like your parents cut down your credit card limits and you are throwing a temper tantrum.

  8. US is just finding an excuse to contain.China. See what Navaro said if you have a buttom to stop China Why not push it?

  9. US can complain all they wants about how Chinese unfair tactic

    But another thing you have to remember is that US aren't fair to the rest of the world either.

    Used to be that every currencies are backed by Gold. Dollar use to back by Gold. People using US Dollar as standard currency .

    Now US Dollar backed by NOTHING. And also what is Deficit budget. ? It's means US outspend what they earned. So they have to issue Govt' Bond which country like China buying them. 

    So in China point of view. Why should any country be allowed to print out it's money without any regulation. ?

  10. That's because No US administrations in the past were stupid enough to rise "Trade War". I mean this is not a poker game; here's no such thing as winner takes it all! All parties will lose for sure.

  11. China has no ability to retaliate. 1. Tariffs ….. good we buy more American made products. 2. Make it even more difficult for American companies in China ? …….. good we build more here. 3. Sell our debt ? Financial suicide for China. They would have to sell at a discount and what do they replace it with ? Venezuelan bolivars ? We (the USA) would be much better off with not doing business with China. Cheating and lying is a part of their culture. They aren’t going to change.

  12. Americans don't understand what "tariffs" mean. They really think that the Chinese government will pay or that companies pay.  ALL CONSUMERS PAY THESE COSTS.  Our pockets are being pilfered so that American companies that can't or won't compete feel better temporarily while WE pay for it.

  13. Pro Chinese tariff people are just like the pro Iran war people. They think we won Afghanistan and Iraq and that we have enough troops for a country that will shut down ALL oil and leave us just like Japan was in 1945 – you could mobilize ON FOOT ALONE.  No oil. No war.

  14. 80% minerals 80% lost of china french can benefit and other asian countries that do have that same kinds of mineral it's a win for other countries

  15. This video is dumb.If China dump treasury the fed will buy all of it from it account quickly or other countries will buy it .China will be hurt the most .Trump could freeze their selling just give a phone call to the fed.China real weapon is to buy gold and use it to fight the dollar

  16. Try all you must USA the Evil Empire but you can not stop China rise. Lol! It’s already too late.

  17. So many people comment on how the US is an aggressor, bully, etc. Chinese and Eastern European and African "tribes" were hacking each other up with anything they could lay their hands on way before the North American continent was even discovered. The idea that the world would suddenly be a much better and/or safer place if the US would suddenly cease to exist is patently ridiculous.

  18. Why it isn't a Nuke option is that China is reducing its U.S. debt holdings all the time now. In a decade they will cease to be entirely.

  19. This a lie, China sold off most of its reserves a few years back and you did not hear about it because it did nothing, No harm to the US, and if they sold off 80% already it nothing happened what will the last 20% do Zero, The latest BS I hear bing spun is rare earth elements and how China has everyone at their mercy because they control and own the market, While they do control the market, The only reason is we shut our mines as did most other countries because China was willing to sell to us at a huge discount, The USA just needs to reopen the mines, it may take 6 months or so but its not like we need them and they have us over a barrel. 6 months and by then China's economy will be finished, Its close to being finished now, BTW why does no one talk about the FACT that China will run out of Fresh water by 2024????.

  20. China's holding of America's debt isn't close in amount to the intellectual property they've stolen, nor can China survive without U.S. in selling their goods. Apple hasn't exactly been user friendly or Constitutionally lawful to our rights and freedom. Personally, I reject their Tracking Devices and DATA Theft equipment they call cell phones! When more people Awaken to reality, they will do the same in taking back their freedom and rights of Privacy!

  21. The end results will be a global recession because in simply language it creates insincerity and instability for the future in and ingradated world economy. We are at the end of a business cycle which used the creation of liquity to wash away debt from 2008 depression. We are reverting to nationalistic policies and protectionism which couls result in a serious lowering of our standard of living because we are a debtor nation both at a governmental level and privately as individuals. We will go into recession by Christmas this year but the level of severity will depend on this chaotic policies which we have a rogue president. It's the common worker who will pay for this ill thought and selfish administration.

  22. I do not agree that the US counts on China to buy it's national debt all that much. As of now China holds about 5% of the US national debt.
    Do the math.
    1.2 trillion/ 22 trillion
    = 5.4%

  23. A very superficial commentary. It doesn't add anything to someone, such as myself, who has a basic understanding of economics & international trade.

  24. WHO CREATED CHINA's. DEBT HOLDINGS IN AMERICA IS THE REAL ISSUE TO BE ANALYZED. WHY, AND WHAT DID THEY GET FROM BUILDING UP CHINA'S DEBT HOLDINGS IN AMERICA. BLOODY GLOBALISTS THUGS. CORRUPT EVIL DOGS. SELLING OUT THEIR PEOPLE FOR A FEW DOLLARS IN THEIR CORRUPT POCKETS.

  25. Trump has to answer to the american people? No, Trump has to answer to the american elites.

  26. If this man can't read or speak Chinese, I don't think he knows China enough. I don't trust this guy.

  27. Tell me CNBC is not bias. Haven’t heard anything good about China

  28. I knew that Huawei blunder was just the tip of the iceberg.

  29. why i keep relate nuclear option with fallout 4?? i must play too much of it

  30. america just talks because it needs an enemy so poliiticans can keep their jobs, but they all benefit from cheap goods from china and inflating the value of the USD.

  31. For crying out loud, stop being ignorant. 1+trillion is nothing when you compare it to the national gnp, China is a thief and we have to put a stop to it.

  32. OK, it can be put in this way, your trading partner own you trillions and pay you good interest each year. now, Crazy uncle is in charge, he don't want trade with you anymore because he believe his company is losing too much money from trading with you. he accuse you cheating, stealing and whatsoever so he can have his new trade terms. Question is, are you going to sell all the debt to make the crazy uncle looks bad ?

  33. Let’s look at a contrarian approach. In stead of selling, if China were to BUY more US dollars, it would drive up the US interest rate, creating inflation. With prices of goods already going up as a result of the trade war, this would be the ULTRA Nuclear option. I love being an arm chair quarterback. Lol

  34. Don’t worry, China will lose. Trump always carry a letter of tax reminder to show media the world his achievements over Canada,Korea, Mexico.

  35. When CHINA's US debt is going to be Zero. Then China blocks exporting rate earth metals to America. It means Real War is coming soon.

  36. Your third option….so called Nuclear button option…..sell all its Holdings of US TReasury Bond, Chinese have about 1.1 trillion $ worth of that…….but who is going to buy it! Except the American Govt itself, and it will make sure they sell it at a Distress rates. So in one go Americans give the Chinese a Haircut….and solve their own debt Problem!!

  37. China, sell that debt! Do me the favor! Please! The US is the largest oil producing country in the world! If you sold US debt the dollar would go down, oil would go up. This would make investment in oil production and exploration more profitable and cheaper. It would put oil drillers in the US back to work drilling more well producing even more oil!

    Despite what you hear about the loss of US manufacturing jobs in the media US manufacturing output is at an all time high! That means that more stuff (dollar wise) is made in the US than at any time in history! That is huge! We make a lot of stuff and we don't need a lot of workers to do it. The US manufacturing employment percentage is 10.5% while Chain's is 16.9%. The US only employes 16.3 million worker with an output of $1.86 trillion while China needs 128.8 million workers to produce only $2.01 trillion in goods. American workers are far more productive than the Chinese! I got my facts from the Brookings institute 2015#s. Keep in mind that these numbers are from 2015 and the US economy has been on a break neck pace since then and it looks like China is loosing this trade war.

  38. First thing first, why is China buying up US debt in the first place? For Charity reason? How about US 'Nuclear option' of freezing all China overseas acc? China just can't win this trade world and reason is simply that they had more things to hide..and therefore more to lose.

  39. "This isn't likely to happen" lol https://www.ft.com/content/0933cdfa-7766-11e9-be7d-6d846537acab

  40. Since when do Trump and Pelosi have to answer to the American people?? We are palpably slaves to our corporatist masters, all under the supervision of the Deep State. I grant that China and The United States have different political systems, but it's foolish to suggest that the Chinese are less accountable to their people than the United States is, especially with the United States streaking its way into modern Orwellian fascism. One thing the United States might consider is breaking our consumerist insanity. The pending economic collapse might do that for us.

  41. Trump is the maker of chaos in the world, the most arrogant and swaggerer in the world, and no one in the world likes your Trump, only you like it.

  42. You just said China has a nuclear option. Yet they don't have a lot wiggle room? Then what is nuclear option? Btw it's not China's national interest to hold US debt. US debt is not a necessity for China. They can sell as they want.

  43. When it come to US 1.2 trillion dollars bound to China it’s a double edge sword. Yes that will wreak havoc on America’s economy but if China does do that its a retaliation against her self. They need us more than we need them. Remember that!

  44. We don't have to allow China to sell its US bonds. Also, we can just invalidate the bonds, defaulting on them.

  45. One thing you didn't address was that China's economy is nearly self-sustainable. They have enough over-all people of both super-rich and super-poor to essentially maintain themselves on a national scale regardless of world economical issues…

  46. Typical Rockefeller owned propaganda media outlet. China holds less than 3 Trillion in Washington debt. It's a drop in the bucket. You guys have been played like a violin since the Maestro decided to take over. You'll haven't won a SINGLE POINT!!!

  47. Please research “plant based cellulose” the replacement for plastic is plant based cellulose!
    https://youtu.be/n5Qbi_dB3Qo
    Focus on 13:14 (min:sec) of the video!
    With the video I sent, if you want and can, please contact the headquarters of big companies such as Pepsi Cola, Coca Cola, Nestle, P&G, etc…. and gently talk them into the replacement for plastic, which is “Plant Based Cellulose”! Please contact governments of China, India, and a lot more others!!! Please be super active; planets future is partially on your shoulders; please don’t get frustrated! Always be kind, kindness gets you always thousand more miles!
    And plastic eating bacteria should resolve the plastic junk piles
    https://youtu.be/Amh5k6Dbv0M
    However, this bacteria has to be tamed!
    https://youtu.be/YI3tsmFsrOg
    Also including the following way:
    https://youtu.be/Ts4he6o3fRE
    Focus on 17:28 (min:sec) of the above mentioned video
    Please Distribute To all others
    https://www.youtube.com/watch?v=Nds1_qbVZvs&feature=share
    https://youtu.be/Pm58yVMT3MY

    To some extent the following happens if you don’t take action
    https://youtu.be/ju_2NuK5O-E

    You must do your part;
    Start not-using plastic anymore
    Start buying drinks in glass containers,
    don’t use anymore plastic bags,
    don’t buy anything with plastic, no more plastic toys
    Buy wooden toys, toys without plastic
    Recycling is just prolonging the eminent disaster
    Stop using anything containing plastic
    Never expect that plastic problem will resolve itself
    Love our planet and handle natural resources with respect
    Natural resources, such as fish eats plastic too
    A garbage pile of plastic might be burned;
    but now the plastic problem is also in our air and
    in your lungs and in the longs of your children
    Plastic in the lungs is CANCER, because it’s disturbed
    through blood to the entire body;
    Do your part, be proactive,
    get involved through any means listed

  48. Reagan didn't reduce tariffs on specific countries and specific products. So why is Trump only raising tariffs on specific countries and specific products? If you want to reverse the damage from Reagan's ""free trade" policy you need to raise tariffs on all countries, not just a few select countries. And all products that are in direct competition with US products. It will make things more expensive in the USA, but also bring a lot of manufacturing back to the USA.

  49. Very easy to see..The Jewish hand involved in all of this. A strong USA which is a lap dog to Israel is most important. The money God in the synagogues must be obeyed.

  50. but US has a nuclear weapon too, ten of thousands of the high level Chinese officers have their children and corruption wealth hiden in US. Wowp, maybe i should not tell…

  51. IndiA supports you china time for whites to be genocided in stolen America stolen kanata

  52. IndiA supports you china time for whites to be genocideD'' in stolen America stolen kanata

  53. IndiA supports you china timefor white genocidE' in stolen America stolen kanata

  54. No, the biggest holders of U.S. debt/treasuries are people in the U.S. China only has about 4% of it. False info repeated enough, somehow becomes "fact". CNBC does nothing to stop this false info being repeated constantly on their channel.
    Japan owns most all of its debt. Japan finances their future for their society in a healthy way. The U.S. should strive to hold most all of its debt and to receive these future debt payments and not bleed money in the future as interest payments to other nations.

  55. U.S will have to start making more products better quality more jobs,whats the problem?

  56. I don’t think so. If you owe bank fifty you have problem owe them trillion they have problem. We are at war with China. They are a threat to are way of life. And will continue to steal everything. So prepare to ration.

  57. US begging for fairness? Has America ever treated any country with fairness?

  58. US 70year sanction against China prevents sailing most of things of interest to China. Here lies the root of trade imbalance.

  59. FREEEEEEEEEEDOM🇺🇸🇹🇼🇭🇰🇯🇵🇬🇧🇰🇷🇺🇸🇹🇼🇭🇰🇯🇵🇬🇧🇰🇷🇺🇸🇹🇼🇭🇰🇯🇵🇬🇧🇰🇷🇺🇸🇹🇼🇭🇰🇯🇵🇬🇧🇰🇷

  60. Could someone explain how China selling US Government bonds would weaken the dollar?

  61. Trade deficit is like sports, teams do bad deals to benefit the league and revenue sharing. America buys China's product but because they dont buy much from the us, in turn they buy debt to keep its so called competition in business. Its all smoke and mirrors at the end of the day. One world goverment already exist thru banking.

  62. 👎. What specifically would happen if they take the nuclear option? How can you omit that?

  63. Fairness?
    Can one believe that? Hold my debt, China! Yes, Sir!
    Stealing IPs?
    What did they steal? And why were the thieves not taken to court and made to pay. Complaining constantly is bad form whilest sanctioning all and sundry. Billions from ZTE Corp.
    Is that fair?

  64. CNBC is so one sided! They only report on what China can do to us. They won't tell you what the U.S can do! They are so anti-trump! The U.S holds the cards here! Trump has the guts to stand up to countries taking advantage of us. GO USA!

  65. Doesn't CNBC know that the U.S. bond market is within the global free market? Lmao. Obviously, someone else will buy up all the bonds that China sells and then the U.S. would just be paying to someone else. If you don't believe this, then you do not understand how the free market works… and yes, it's a global free market.

  66. I think the US Debt may not be China's 'Nuclear Option' but rather Trump's. If Trump doesn't like the result of China-US trade talks, it is very possible that the US Congress will someday and somehow pass a law says China's holdings of US debt is illegal, and the US needs not to pay it. So it is very dangerous now for China to hold such a large amount of US debt.

  67. They make cheaper products, it's not unfair, they just have a better business model , 🤣

  68. Wait….Congress and Trump are ACCOUNTABLE to Americans? You meant accountable to CORPORATIONS.

  69. Let the Chinese try. These so called experts are DUMB. It's Kamikaze if they dump(sell) their Treasuries. The moment the markets know about it, the value of the treasuries go down, including the ones the Chinese are holding. Also, even if the Chinese do want to retaliate and sell, that will increase the interest rate for everything in this country, forcing consumers and businesses to slow and even stop spending. That will significantly reduce the exports of which the Chinese economy is entirely dependent on.

  70. I wonder what will happen when countries around the world REFUSE TO PAY CHINESE DEBTS?
    The Chinese are taking a huge risk but the world may find ways to reduce their deficit…no single
    country should ever be allowed to finance the world's economy, what is their purpose especially
    with Hong Kong and Taiwan in the backdrop and stealing land from neighboring countries.

  71. Let's hope China retaliates against companies like Apple. Long term plans will change for sure! Lets hope China sells everything it has invested in America. We are going to destroy China anyway. All Western nations are soon going to war with China, the same it did with Nazi Germany.

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