But their likely action, according to the article you linked, might actually help the US economy by making its exports more competitive:
> China would not call in its debt all at once. If it did, the demand for the dollar would plummet. This dollar collapse would disrupt international markets even more than the 2008 financial crisis. China's economy would suffer along with everyone else's.
> It's more likely that China would slowly begin selling off its Treasury holdings. Even when it just warns that it plans to do so, dollar demand starts to drop. That hurts China's competitiveness. As it raises its export prices, U.S. consumers would buy American products instead. China could only start this process if it further expands its exports to other Asian countries and increases domestic demand.
China only amassed so much US debt because it sells RMB to buy dollars to keep the RMB down and fuel exports. Reversing that policy would make Chinese exports less competitive on the world market. Ultimately, that could thwart the CCP's ambitions to create "national champions" by limiting them to their domestic market.
How does this affect the US any more than whether they measure oil volume in metric or not? It's not something that changes the real economy, it's just a matter of which ruler you're using. If the oil company has European employees, it still has to pay them in Euros. If the oil company has American employees, it still has to pay them in dollars. Likewise for customers. You have currency coming in, and if it's not what you need, you trade it for what you need.
If you owe the bank a billion dollars, you own the bank.
China would be hurt gravely.
It might affect the price of the next sale of Treasuries, but that's the limit of its impact.
China economy would suffer more.
https://voxeu.org/article/china-s-wto-entry-benefits-us-cons...
https://www.thebalancesmb.com/top-countries-exporting-to-the...
China's #1 customer is the US, by a large margin. Around half of their exports come here. China has far more to lose in a commercial war.
It'd hurt them, but it'd hurt America a lot more.
Nope. The only way they can hurt the US is by economic suicide (dumping all debt). And I mean total annihilation: they'd be shooting themselves. And the USD would suffer, true. But it would recover, US economy has far more autarky.
I don't think so. China has a huge amount of power over the US economy[1].
What Happens If China Called in Its Debt Holdings
China would not call in its debt all at once. If it did, the demand for the dollar would plummet. This dollar collapse would disrupt international markets even more than the 2008 financial crisis. China's economy would suffer along with everyone else's.
China could crash the American economy any time they want. It'd hurt them, but it'd hurt America a lot more. Especially because oil exporters would immediately switch to doing oil trade in Euros, which would make it exceptionally hard for the dollar to recover.
[1] https://www.thebalance.com/u-s-debt-to-china-how-much-does-i...