What if China runs out of US dollars? – Victor Shih

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Victor Shih

China has been saving much capital in US bonds and could use those resources to finance its debt and policies in the past. But what happens if China runs out of US dollars, asks political analyst Victor Shih in the New York Times.

The New York Times:

Both men [Trump and XI] rely on a political base that responds to nationalism.

Mr. Xi also appears to have a team of hard-liners around him, including the Minister of Commerce, Zhong Shan, who was recently added to the Chinese negotiating team.

“For now, Xi is signaling that he is a tough nationalist who will not back down in the face of very aggressive behavior on the part of the Trump administration,” said Victor Shih, an associate professor at the University of California, San Diego, and an expert on the Chinese economy…

“The draining of China’s foreign exchange could break China’s current economic model of using state directed money to finance certain policies,” said Mr. Shih. “China can print renminbi endlessly but it can’t print American dollars.”

More in the New York Times.

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