Question

Why China does not sell its debt to US? (10 lines)

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Abdul-Rahim Taysir

Answer 1

China as we know is the second largest foreign country holding the US treasuries, with holdings of over $1 trillion. China is also an important trade partner of US. The china is not selling it's massive debt to the US due to the certain diplomatic difference between the two countries. The foremost reason is that China is not selling it's massive US debt is that the other markets like spot markets, future markets, reserve and gold markets have no capacity to absorb such a large amount of assets. The US debts of China needs to be backed by some very powerful asset. China consider not to sell US debts due to the non availability of any asset. The china in addition had made some adjustments in this regard, the china is making investment in US debt and non debt assets. The china is keeping in view the profitability of these assets. China's stake in US's debt has more of a binding than dividing effect on the bilateral relations between the two countries. The two countries are the arc rivals in the international level. They are competing with one another to gain the more power.

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