ELI5 Why is china dumping US treasuries a bad thing? Doesnt that just transfer ownership of the deby?

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ELI5 Why is china dumping US treasuries a bad thing? Doesnt that just transfer ownership of the deby?

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It’s not bad if they sell some. It would be bad if they tried to sell all of what they own.

It’s supply and demand. And China has a lot of supply (they own a lot of treasuries). If they tried dumping all of it, it would lower the value of the treasuries. And that would definitely affect the US. It would also affect China negatively. And it would affect the world’s economy negatively.

It won’t happen.

China own $1.12T in US debt, Japan owns $1.04T, there is a total of $22T.

If China sells their 5% of US debt, and other investors buy it at close to listed value, then China has lots of cash. That’s not a bad thing.

If China sells their 5% and other investors will only buy it at a deep discount, then China loses a lot of money and the reliability of US debt could be seen as lower. Both these things are bad.

As of recent transactions, it seems like there are plenty of buyers.