The Yuan Dynasty: China’s Bid to Replace the Dollar

Chinese government officials recently informed Washington of intentions to ‘slow’ or outright ‘halt’ state purchases of US Treasury bonds.  The economic realities underlying Beijing’s report caused noticeable effects on the bond and stock markets.  Wider geopolitical considerations were certainly felt among analysts, government officials and within industry.  With the Trump Administration’s looming trade war against China sitting alongside threats posed to Chinese allies North Korea and Iran, China’s palpable concerns – and China’s perceived need for putting its largest trade partner on notice over said concerns - are hardly a secret to either side or to the rest of the world.  China’s intended move to price energy resources and other commodities in its own currency is interrelated to potential bond dumping issues.  In this episode of Money & Fear, we’ll review the underlying fiscal and political stakes, which make this latest Chinese announcement hard to ignore, and speak to rising risks of approaching conflict between the US and China.

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Show Notes

China Weighs Slowing or Halting Purchases of U.S. Treasuries

China denies it intends to reduce US Treasury purchases

China is reportedly thinking of halting US Treasury purchases and that's worrying markets

Donald Trump ‘may be ready to press’ the punitive China tariff button

Report Chinese could stop Treasury buying seen as political but hits raw nerve

China just reminded the United States that Beijing is its banker

The Reasons Why China Buys U.S. Treasury Bonds

Explainer: Could China tame its appetite for U.S. Treasuries?

China just sent out a warning, and it went right over Wall Street's head

Bill Gross: Here's why the 25-year bull market for bonds is over

Bond guru Bill Gross signals a new era for Treasury markets

The 3-decade bond bull market is in danger

What Is Behind China's Bond Rout?

So What If China Has $1.32 Trillion In U.S. Treasuries? It Still Can't Crash America's Economy

Foreign governments are dumping Treasurys like never before

Foreign governments are dumping US Treasuries: a chart

China has grand ambitions to dethrone the dollar. It may make a powerful move this year

How China will react to saber-rattling US T-bond ploy

China FX regulator weighs in on US bond-buying story

Fake News from Bloomberg about China’s US Treasury holdings

China sees new world order with oil benchmark backed by gold

China sees new world order with oil benchmark backed by gold II

Russia-China bond market play could kick-start new dollarless financial system

De-Dollarization, Gold, and the prospective role of the Yuan

China's Bond Market Whiplash

Is the US a bigger debt risk than Russia and Botswana? A Chinese rating agency thinks so

B&R to boost use of renminbi in global trade

China Downgrades US Credit Rating From A- To BBB+, Warns US Insolvency Would "Detonate Next Crisis"

China will 'compel' Saudi Arabia to trade oil in yuan — and that's going to affect the US dollar

 A Saudi Palace Coup

Saudis Say Aramco IPO ‘On Track’ as All Options Open for Listing

China May Be Using Aramco IPO To Promote Petroyuan

Aramco Hires JPMorgan, Morgan Stanley, HSBC for IPO Roles

Golden Rule - Why Beijing Is Buying

United States Current Account to GDP – 1980-2018

What is the Deficit as Percent of GDP?

B&R to boost use of renminbi in global trade

*For additional footnotes and links refer to the Newsbud article link above

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Comments

  1. A.F.M. van der Steen says:

    intresting analisys, but you’re talking in the backside of the microphone.

  2. CuChulainn says:

    thanks for this excellent analysis. if i understand correctly, since the fall US financial firms such as JP Morgan have greater freedom to operate freely in China; would you kindly comment on this & its implications for US debt markets?

  3. Richard Williams says:

    I may have missed this point in your report, but why shouldn’t the Fed just buy up any Treasuries being sold – business as usual?

    • Because it’d be the very sort of ‘asset cannibalization’ which has accounted for the rising loss of confidence triggering the selling or ceasing of purchase of US Treasuries in the first place, and not just from Beijing, either. Because it’d confirm foreign fears further over rising risks of ‘unmanageable’ inflation domestically, let alone of a spiraling dollar.

      Plus, what would be the point of issuing said bonds to foreign buyers in the first place if the Fed were to buy up said ‘slack’? Further, what’d be the point of having an interest rate mechanism?

      • Rich Winkel says:

        if the fed can simulate foreign demand they could keep the charade going longer. Is that what was going in with belgium?

      • Richard Williams says:

        Thank you for responding to my query. I very much appreciate your analyses, but don’t your arguments apply since 2008? The Bank of Japan is buying up everything – government and corporate bonds, shares. The GDP to debt ratio is 200%! This has gone on for twenty years and Japan is still there. Minsky would be turning in his grave. When will, must this stop? What would happen to China, if it sold all its Treasuries?`It would have no foreign exchange reserves.

        • Yes, it’s gone on since the 2008 Financial Crisis, which was never fully ‘resolved’, but just papered over. There’s a wider ‘transition’ planned over the medium to longer term, yet the confidence/perception switch is flipped with deep finance decides that it is, because the fundamentals clearly do not add up on their face today.

  4. Rich Winkel says:

    Western govts aren’t incompetent, they’re controlled by the western financial sector, which has already moved much of their assets eastward. The world is run by disaster capitalists.

  5. Rich Winkel says:

    what do you think of central banks buying stocks and thus taking ownership of physical assets by printing money? is this the ultimate endgame?

    • Pre-planned, expectedly ‘necessary’ asset culling en route to ultimate global monetary ‘synthesis’ via traceable, audit-able digital “money” – ‘ideally’ implanted onto persons’ bodies – is the end game.

      Traceable, dictatable universal human labor, consumption & energy.

  6. Yuan as new world reserve currency? Unlikely. China wants to avoid the Triffin Dilemma. They would rather see an SDR modeled after the bancor.

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