China fires financial bomb against US
22:46
China may gradually reduce its holdings of US Treasury bonds to around $800 billion from the current level of over $1 trillion, the Chinese Global Times daily reported. Such a move could seriously undermine the international financial system and make it more difficult for the US to borrow money.
China is supposed to take such a step by the growing US federal deficit, which increases the risk of insolvency. In August, the US debt rose to 106.9 percent of GDP and amounted to $26.7 trillion. Moreover, the Trump administration is continuing its violent attack on China, Chinese experts note.
China, the world's second largest owner of US debt, has been steadily but decisively reducing its holdings of US bonds in recent years. In the first six months of this year, China sold about $106 billion in US treasury bonds. In annual terms, Chinese US bond holdings fell by around 3.4 percent at the end of June.
The US Congressional Budget Bureau said Wednesday that the amount of debt issued by the US government this year will be around 98 percent of US GDP, a level unprecedented since the end of World War II – and well above the internationally recognized 60 percent safety line. The federal deficit is projected to exceed the size of the U.S. economy in 2021.
