According to the author, why will China likely still continue to buy USA debt
instruments, such as US Treasury bonds, even though in 2024 China is a
competitor of the USA for dominance in the global economy and in geopolitics?
Select ALL the correct answers.
If the Chinese stop buying T-bonds, the value of their present holdings in USA
debt will decrease, (demand curve to the left) and they will take a financial loss.
Because the Chinese do not have any real alternative to the use of the US Dollar
in the global economy., because of the importance of the US Dollar in world
trade.
The Chinese do not want to buy much government paper backed by euros,
because the "Euro Zone" is in constant danger of disintegration. It is a far safer
bet that the USA economy will be around and healthy in the longer term, say, 15-
30 years.
Because the China yuan is more important in world trade than is the US dollar.
Read the following selection, Then answer the question.
All the creditor countries, the biggest of which is China, are locked into the Us dollar.
They cannot sell off much of their debt without lowering the value of what they still
have.
If the Chinese stop buying T-bonds, the value of their present holdings in USA debt will
decrease, (demand curve for UsA dollars goes to the left) and they will take a loss.
For China,there is no real good alternative to the UsA dollar: The Chinese do not want to
about politics and danger of disintegration. It is a far safer bet that the USA economy
will be around and healthy in the longer term, say, l5-30 years.
No other countries (UK, Canada, Australia) have enough of a volume of their currency
(their economies are too small) to support a big demand for their debt instruments from
the Chinese.
The Chinese do not want to invest in Japanese debt paper, because Japan's economy is too
small, but even more so because there is no way that the Chinese would tie up trillions of
renminbi with their traditional blood enemies -the Japanese, and the Chinese cannot simply
inject those Us dollars, earned from exports to us and others, into their own economy,
that is, they cannot print more Yuan (Renminbi). That would simply cause inflation in
China, so they must keep buying dollars. Thus, the Chinese will keep buying USA Treasury
bonds and notes to not rock the boat. They are in a balancing act with their macroeconomic
situation.
According to the author, why will China likely still continue to buy USA debt instruments,such as Us Treasury bonds, even though in 2024 China is a
competitor of the USA for dominance in the global economy and in geopolitics?
Select ALL the correct answers.
If the Chinese stop buying T-bonds, the value of their present holdings in USA debt will decrease,(demand curve to the left) and they will take a financial loss
Because the Chinese do not have any real alternative to the use of the Us Dollar in the global economy., because of the importance of the US Dollar in world trade.
The Chinese do not want to buy much government paper backed by euros,
because the "Euro Zone"is in constant danger of disintegration.It is a far safer
bet that the USA economy will be around and healthy in the longer term, say, 15- 30 years.
Because the China yuan is more important in world trade than is the US dollar.
