My guess is that this might be a bit of "fake news" or some hyperbole.
China is literally 'stuck' buying and selling US dollars in a tightly controlled and orchestrated manner in order to continue its' control (some say manipulation) of the Yuan. If every 12 months or so China takes in at least $400B + US Dollars in surplus they have to do something with it - and there are substantial restrictions on China's government buying US companies. In fact, Jack Ma (Alibaba) tried to buy MoneyGram for $1.2B and was rejected - and he's a private investor. China has indeed diversified into other interest-bearing debt denominated in other currencies - but that is a very shallow pool as compared to the US Treasury market. Point being, their choices are somewhat limited and some might argue that this is actually a much bigger problem for China than it is the US. The Chinese require a relatively low risk, large, liquid market denominated in US Dollars in order to continue to turn over their huge surplus receipts. In fact, the Chinese have been known to buy and sell US Treasuries through other foreign national intermediaries.
It's kind of a circular firing squad - if China sells off US debt or even officially announced that it will no longer buy US debt the effect would depress the dollar and make the Yuan stronger, which is the last thing the Chinese government wants.
China is literally 'stuck' buying and selling US dollars in a tightly controlled and orchestrated manner in order to continue its' control (some say manipulation) of the Yuan. If every 12 months or so China takes in at least $400B + US Dollars in surplus they have to do something with it - and there are substantial restrictions on China's government buying US companies. In fact, Jack Ma (Alibaba) tried to buy MoneyGram for $1.2B and was rejected - and he's a private investor. China has indeed diversified into other interest-bearing debt denominated in other currencies - but that is a very shallow pool as compared to the US Treasury market. Point being, their choices are somewhat limited and some might argue that this is actually a much bigger problem for China than it is the US. The Chinese require a relatively low risk, large, liquid market denominated in US Dollars in order to continue to turn over their huge surplus receipts. In fact, the Chinese have been known to buy and sell US Treasuries through other foreign national intermediaries.
It's kind of a circular firing squad - if China sells off US debt or even officially announced that it will no longer buy US debt the effect would depress the dollar and make the Yuan stronger, which is the last thing the Chinese government wants.
