Chinese press says selling is coming

State-sanctioned Global Times — citing economists — says China will cuts its holdings of US bonds from the current level of above $1 trillion to about $800 billion on worries about US crackdowns and a ballooning US deficit.

This is framed as speculation but nothing gets past the Chinese censors unless they’re sending a message.

“China will gradually decrease its holdings of US debt to about $800billion under normal circumstances. But of course, China might sell all of its US bonds in an extreme case, like a military conflict,” Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Thursday. 

One reason for the bond selling is because Beijing is increasingly concerned about the potential risks behind surging debt level in the US, experts said.

China has cut USD holdings this year so the trend is certainty divestment and it’s undoubtedly negative for the currency going forward. Then again, the Fed’s buying $5 in bonds for every one that China sells.

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