What would happen if China called in the debt?

what do you think they'll do with it, ship it back to china?

 

Develop it.

 

sounds positive

 

Building production. I think not!

They own you lock stock and smoking barrel

Regards
Highlander

 

The fed would print as much money as needed to pay the Chinese and pretend there is no resulting inflation.

 

and the chinese would be sitting on a pile of u.s. dollars, what then?


June 3, 2013


China is more than happy to own a large portion of the U.S. debt. Owning U.S. Treasury notes helps China's economy grow by keeping its currency weaker than the dollar. This keeps products exported from China cheaper than U.S. products, creating jobs for the Chinese people.

Because of its ability to ship low-priced goods, China's economy has grown around 10% annually for three decades. It's currently the third largest economy in the world, after the U.S. and the EU.

China needs this growth! Its GDP per capita was only $9,100 per person, compared to $49,800 per person for the U.S. This low standard of living allows China to attract overseas manufacturers to outsource jobs by paying its workers less. Therefore, despite its threats, China will continue its position as the world's largest holder of U.S. debt.

Kimberly Amadeo - President of WorldMoneyWatch.com

 

Sorry to disappoint you. They are building production here.

 

they own the company they decide where an when!
Regards
Highlandér

 

There's nothing they can do except maybe embargo products made in china and shipped here. We owe them too much to have them try to do anything else.

 

China is a major buyer of your debt. If they stop buying the US will have to raise interest in order to lure people into buying US debt. Interest rates will climber ever higher to get people out of stocks and real estate and into US Treasuries.

High interest will mean a major recession. Maybe it will be the day when there would be serious discussion about defaulting on US debt.

 

which means china would probably have a major economic depression

i have a feeling that's not the path they''ll choose

 

China will not have a depression. Currently they buy 1 trillion dollars of debt. If they stopped buying our debt, they will have 1 trillion to work with. That is money that they can spend on their economy.

If they stop buying our debt, they will tank our economy. So for China to stop buying US debt, they will have to be prepared for the consequences. That means they will need a fortress economy that can survive the US decline.

Give it time. They will do this in the future. They want to be world leader and bury the US. But they can't destroy their major competitor because they need us. For now.

 

They'd get laughed at. They could sell off their holdings, there are enough who would buy it, but them calling in the debt would be like the bank calling you and saying, "hey, that 300k we loaned you five years ago for your mortgage? Yeah, we're in a bad mood so you have to give us the remaining balance now." Just laugh.

 

without us importing chinese goods, it would be almost unavoidable

they don't have a fortress economy and are unlikely to create one any time soon

 

All good points Dujac. Today China needs the US. But that can change. All they have to do is develop their domestic economy. They have what, 1 billion people. If you turn them into 1 billion consumers. They can then lose 250 million American consumers. It will hurt, but then, the Chinese play hard ball. They want to be the world's #1 superpower. And we stand in the way of that.

 

the usa has a good record of being able to change and adapt to circumstances

i'll wager that we'll be able to handle whatever is necessary, when it arises

we have a great advantage over the chinese, that advantage is freedom

in the mean time, china will continue to hold treasury bills & etc