China threatens to trigger US dollar crash

Discussion in 'Current Affairs, News and Analysis' started by hong_kong_fuey, Aug 8, 2007.

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  1. What goes around, comes around.

    May the Chinese live in interesting times....
  2. It seems a good threat, but its misguided.

    If they did such a think i would expect the USA to severely restrict imports, which China relies on. These countries are financially linked to each other, its not a one way street.

    Whats worrying is that economic retaliation could turn to military action. But i think its unlikely, as neither could win, which makes the military option pointless for both.

  3. Ord_Sgt

    Ord_Sgt RIP

    Yeah right and watch the US cripple the Chinese economy by putting import tarrifs on everything made in China and forcing pretty much everyone else to do the same. China may have growing influence but they are not there yet. Any deliberate attempt to undermine the US economy would be a disaster with huge repercussions.
  4. China can only sell the assets if they have a realisable value.

    If they tried it how long would it take the US to declare foreign held bonds frozen and of no realisable value subject to reaffirmation of value by a US bank thus rendering the Chinese holding of no value and allowing them to economically cripple China in one go?

    If one side opts for the "nuclear option" the other side can respond in kind.
  5. None of this financial gubbins makes any sense to me, but is it not a little stupid to put any amount of financial control of your currency in other countries' hands?
  6. Hasn't thtis already beent he subject of a Tom Clancy novel?

    Couple that with the sept 11 potentially being influenced by another one of his (Executive orders i think, or the one before) then should Tom stop giving others ideas?
  7. We in the west deserve everything we get by trusting this communist nation.They have virtually taken over half the worlds manufactoring jobs and especially the UK have exported a lot of jobs on the back of cheap labour in order to save money for their greedy shareholders and high earning executive management teams.
  8. The Chinese economy isn't as heavily dependant on the US as it was even 5 years ago. The EU is now it's single biggest trading partner, then Japan, with US in third place. Also, the domestic market makes up a far larger slice of the economy than it did then. A trade war would hurt them quite badly but not cripple them, and I suspect the US domestic economy would be hurt more as the inward cashflows dried up.

    As to the responding in kind by freezing bonds held by China, that's America's own 'nuclear option', but as with everything that makes a big bang the key is not to be standing too close when it does. These bonds are freely tradable; that's what makes them so attractive. If the US acts unilaterally (quel surprise) to restrict their tradability, they become less attractive as they might suddenly become non-realisable. Other investors might think twice before putting their money where there's a risk they won't get it back and driving away foreign investment isn't a good way to stabilise your economy.

    I don't think a car-crash on this scale would be in anybody's best interest. The fact that this was brought up at all is most likely the Chinese way of saying "Keep your nose out of our business, bitch".
  9. Anyone notice some of the US media's reaction to Chinese 'damaged' goods?

    They warn parents not to buy certain toys from China because they contain lead traces. Not to buy toothpaste from China because it contains chemicals not normally found in toothpaste and is dangerous.

    It seems to be going on for weeks regarding pet food as well.
  10. Oh well that's the South out of food then!
  11. If China starts selling its US dollar assets then the value of those assets will plummet and China will be cutting its nose off to spite its face.
  12. That was a very bad move. Plays into the hands of those who would love to see anti Chinese protectionism

  13. This is a separate issue. The main issue is how China artificially values it's yuan so that it can undermine American & European markets. China is headed for a huge crash sometime in the next 10-20 years because of this as it is now.

    The items being warned about, actually caused a large number of peoples pets to die, and a larger number to get very sick. This prompted investigation into other items like toothpaste laced with anti-freeze or childrens toys painted with lead paint.

    This isn't in reaction to threats by China although I would think that Chinas responses may be in part to this.
  14. And what if Russia would follow Chinese way?