But there are no USD flows within China. China uses RMB. If US locks China out of SWIFT like it did to Iran, China will not be able to sell its USD treasury reserves anymore and they are as good as gone. Then we'll see whether anybody else continues to buy USD treasuries. If not, the USD as a reserve currency is done.
Global reserve currencies:
IMF data: https://data.imf.org/?sk=E6A5F467-C14B-4AA8-9F6D-5A09EC4E62A4
Get the memo?
I do not see Chinese RENMINBI overperforming EURO anytime soon, let alone USD.
All this talk about collapse of USD does not make sense unless Americans want it to but WHY would they?
USD is going very strong and its strength has defied all speculation from time-to-time.
SO WHAT IS HAPPENING?
USA and China are not on good terms for now. American manufacturing base is under pressure to REVISIT its GLOBAL SUPPLY CHAIN and move manufacturing out from China although some will retain manufacturing in China because this country in itself is a huge market which shall not be missed. However, USA by and large will decouple its economy from that of China to the extent possible.
The aforementioned moves will have a significant impact on China and it is looking forward to diversify its economic model in which manufacturing base will have a reduced share and contribution. China is also looking forward to offset American decoupling strategy through BRI which will enable China to expand trading via Chinese RENMINBI but depend upon what terms Chinese offer for trading in this capacity.
Remember this: a very high-value Chinese RENMINBI will erode Chinese manufacturing competitiveness, therefore, a strong USD works in the favor of China.
Chinese strategy should be to push for a new bilateral deal with USA. Wait for the elections to pass and then do the needful.
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My apologies to proponents of USD collapse - you will be sorely disappointed.
USD collapse will bring about a GLOBAL DEPRESSION the likes of this world has never seen before, and will be sure shot way for starting World War III and many will loose.
There was GREAT DEPRESSION before World War II. Be careful what you wish for.
LMFAO do you know who is holding the US dollars?
You get that impression due to this factor: "China has maintained strict rules for individuals and banks holding foreign currency, and thus the currency is not yet considered to be fully convertible. Investors who exchange dollars or other foreign currency for yuan must sell them directly to China's central bank, which incorporates them into the country's foreign reserves. The government then prints local money for use by individuals, companies and banks." - FXCM
Chinese holdings are significant but American economy is much bigger than these holdings:LMFAO do you know who is holding the US dollars?
What on earth are you talking about? US dollars are held by the Chinese government. It can issue new RMB to private individuals in exchange for the US dollars (through banks). The US dollars don't circulate in China. What happens to the US dollars held by the government? They are used by buy US treasuries, which is that graph with the circle and the cut you posted.
This is including private individuals who put their savings in US debt. This is not directly relevant to worldwide use of US dollars as a currency reserve. If you want to see how much China owns, go back to the graph you posted before that shows Japan in the top spot and China in the second and everybody else far behind. No offense but I don't think you have a good grasp of these concepts.Chinese holdings are significant but American economy is much bigger than these holdings:
It is in your best interest to maintain that leverage. Just saying.
Yes, the highlight part is true. But on the flip side of it, this is an impression created by the Chinese banking system due to its currency conversion mechanism in effect - your state does not allow 'open' flows of USD within China (circulation part); Chinese transactions/dealings in USD will be visible to you in the Chinese Central Bank however (Purchases and investments including purchase of American T-bills) - this is by design (an economic model and system).
This is your statement: "Much of those US dollars reserves are held by China. If China doesn't want to hold US dollar reserves, the graphic changes overnight." - post # 29 in this thread.
Mate. Go back to your graph with the circle and the cuts. In the big dollar part, cut out the part that China holds, which is your graph showing Japan in the number one spot and China at number two (don't get it confused with your graph showing private holdings of US treasuriesYes, the highlight part is true. But on the flip side of it, this is an impression created by the Chinese banking system due to its currency conversion mechanism in effect - your state does not allow 'open' flows of USD within China (circulation part); Chinese transactions/dealings in USD will be visible to you in the Chinese Central Bank however (Purchases and investments including purchase of American T-bills) - this is by design (an economic model and system).
Per your logic, USD does not even exist in China. This is utter baloney.
USD is parked in the Chinese central bank, not in your personal accounts.
This is your statement: "Much of those US dollars reserves are held by China. If China doesn't want to hold US dollar reserves, the graphic changes overnight." - post # 29 in this thread.
No offense but your statement is FALSE:
THAT is all-compassing view of the holdings of American T-bills in terms of percentage (internal and external holdings) - you can clearly see this.
Percentage of those holdings in RED = Chinese
Percentage of those holdings in GREEN = Japan
Percentage of those holdings in LIGHT BLUE = Rest of the World
Percentage of those holdings in DARK BLUE = US Domestic
This particular graph: https://www.statista.com/statistics/246420/major-foreign-holders-of-us-treasury-debt/
- is telling the same story but it is RESTRICTED to Foreign holdings only. US Domestic holdings are not covered in this particular graph.
Chinese holdings of American T-bills (more like Chinese investment in American T-bills) is a LEVERAGE of sorts for China in its 'bilateral negotiations' with USA. Recheck my post # 30 in previous page of this thread - my words and statements match and are backed by FACTS throughout.
You are trying to give an impression that the very fate of American economy is on the line due to Chinese holdings of American T-bills - you are deluding yourself, my friend.
You want to get rid of American T-bills? Be my guest. However, you cannot just throw American T-bills in the river (Can you?), you will have RESELL them and somebody else will BUY them - economic adjustment.
Your leverage in your dealings with USA will reduce consequently.
) -- this shows reduced use of US dollar as global central bank reserves when China is locked out from SWIFT. Then make further cuts to the dollar part as other central banks hesitate to buy US dollars for their reserves. Instead, they will choose gold or something else. What you have remaining with the formerly-dominant US dollar part significantly pared down is the end result of a full decoupling of the China-US economies.
Your point is that China is reducing its share of holdings of the American T-bills and its reserves in USD by extension, right? And other countries are doing the same as well?Mate. Go back to your graph with the circle and the cuts. In the big dollar part, cut out the part that China holds, which is your graph showing Japan in the number one spot and China at number two (don't get it confused with your graph showing private holdings of US treasuries
This part is covered; see post # 38 above.
The point is when China is locked out from SWIFT, a major support for the US dollar reserve status is gone overnight and it is likely that more countries will shift away too because the US is unreliable. Everybody may switch to gold, switch to RMB or switch to some basket of currencies like SDRs.
Faster than i thought
