Supposed “Nuclear Option” for China in the Trade War Is Just the Common Sense Thing to Do

There is absolutely no downside for the Chinese, there is nothing "nuclear" about it for Beijing

The US media is constantly explaining why it is impossible for the Chinese to sell their dollar reserves, with their rationale usually a combination of “they don’t hold enough to collapse the dollar” and “if they collapse the dollar they will be hurting as well”.

The US regime media assumes the only possible upside for Beijing would be the hurt it could potentially trigger in the US. That simply isn’t the case. There is a huge upside for the Chinese totally independent of whether it causes a dollar apocalypse or not.

Picture this:

•  China lets its dollar-denominated treasuries, which are almost all short-term, expire and gets 1 trillion in dollar bills.

•  China uses the 1 trillion in dollar bills to buy back yuan from anywhere it can.

•  With the $1 trillion worth of yuan in its reserve coffers Beijing drastically cuts taxes on its companies and consumers.

Here is what this would do:

•  Chinese companies hit by the trade war would be compensated firstly by the fact they were now paying out less in taxes to Beijing.

•  They would be compensated for the second time by the fact Chinese consumers who were likewise paying out less in taxes would be spending more on their products.

•  They would be compensated for the third time by the fact that since every world currency appreciated to the dollar third country markets would be that much more lucrative.

So yes, the extra 1 trillion in dollar bills on the foreign currency exchange markets would cause some kind of weakening of the dollar, but for the Chinese that isn’t even the point.

The point isn’t to hurt the US, but to beef up the purchasing power of all the consumers who aren’t behind a tarrif.

China lent the US 1 trillion dollars. It’s time to bring that money home. The CNN is delusional to think asking for the repatriation of that money could be a bad thing for China.

  1. Rowdy-Yates says

    China can also use One Trillion in dollar bills to buy Gold, technology, weapons industries, and fund the Belt Roadway Initiative.
    Other options
    -Complete ban on Rare Earth metals and pressure other nations that they cannot buy rare earths from China and resell them to America

  2. CHUCKMAN says

    China is very cautious and pragmatic in committing to any big action.

    It doesn’t take a huge effort to decide not to buy American soybeans, an act whose impact on Trump’s political base is clear enough, although I’m sure all available alternative sources were sounded out first.

    The Chinese are virtually the opposite of Trump’s rash, boisterous approach in the steps they take.

    They analyze. They offer hints. They put out suggestions. They observe reactions. Action is taken only after much care, but then the action is decisive, never wavering or half-hearted. Completely unlike Trump’s approach, which so often involves deafening noise that disappears in a week or two.

    Actually, their approach in many things resembles Putin’s, which makes them very suitable partners.

    A trillion is a very big number, even in this day of a billion here, a billion there, and things with big numbers have big consequences.

    I’m sure the Chinese have shrewd people assessing the possibilities on the T-bills.

    Look at the “rare earths” weapon, potentially quite a powerful one. The subtle approach has been, so far, just having Xi visit a rare-earths plant, knowing full well the action will be microscopically examined in the West.

    The Chinese approach has the added combat value of inducing anxieties and fears in the opponent well ahead of any physical act.

    The old stuff about Chinese water torture has more than a little truth in it.

    Again, these are people who learn and use one of the world’s most difficult languages in their affairs.

    They invented one of the world’s most difficult board games, Go.

    They are now, with their large stock of intellectually-gifted people, producing scientists and engineers and analysts in numbers unheard of in the West.

    And last, their centuries and centuries of experience living in a densely populated society have evolved subtle ways and psychological patterns a Trump cannot even imagine.

    If any country is in a position to teach them an important lesson, it is China.

    I am pretty confident that America will come to much regret what it is doing to its relations with China, just as it will regret its many other new impulsive, mercantilist trade policies and its open aggression through economic sanctions, ignoring all rule of law.

    The trouble is that perhaps the rest of the planet will come to regret America’s behavior, too.

    1. Séamus Ó Néill says

      Yes , a nation that invents a board game with more moves than atoms in the universe will not be easily out witted by a moronic bunch of imbeciles. The Chinese are renown for their methodical patience and analysing prowess and a buffoon like Trump is more of an inconvenience than a threat !

    2. Linda Wren says

      Well, that horse has already bolted. Americans judge everyone by their own standards. They have no idea of the diversity of cultures, history, traditions of different communities of the world. Ignorance is no excuse

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