China’s ambassador to the US on Tuesday said that he does not believe Beijing is seriously considering using its massive US Treasury debt holdings as a weapon in the US-China trade dispute, citing concerns that such a move would destabilize financial markets.
“We don’t want to cause any financial instability in global markets. This is very dangerous, this is like playing with fire,” Chinese Ambassador to the US Cui Tiankai (崔天凱) told reporters in an interview when asked if China would consider selling Treasuries or reducing purchases should trade tensions worsen.
“I don’t think anybody in Beijing is thinking seriously about this. It could backfire,” he added.
Trade and economic analysts have often said China could slow its purchases of Treasuries or sell off its holdings to pressure Washington into a deal.
China is the largest foreign holder of Treasuries, with a total of US$1.15 trillion as of Sept. 30, compared with US$1.19 trillion a year earlier, US Department of the Treasury data showed.
As of Monday, there was about US$15.97 trillion of total public Treasury debt outstanding.
China’s Treasury holdings were a good example of the economic interdependence between the US and China, a relationship that would be nearly impossible and dangerous to untangle, Cui said.
China is going to this week’s G20 summit hoping for a deal to ease a damaging trade dispute with the US, he said, while warning of dire consequences if US hardliners try to separate the world’s two largest economies.
Speaking to reporters before joining Chinese President Xi Jinping’s (習近平) delegation at the G20 summit in Buenos Aires, Cui said that China and the US had a shared responsibility to cooperate in the interests of the global economy.
Asked whether he thought hardliners in the White House were seeking to separate the closely linked US and Chinese economies, Cui said he did not think it was possible or helpful to do so, adding: “I don’t know if people really realize the possible consequences — the impact, the negative impact — if there is such a decoupling.”
“The lessons of history are still there. In the last century, we had two world wars, and in between them, the Great Depression. I don’t think anybody should really try to have a repetition of history. These things should never happen again, so people have to act in a responsible way,” he said.
Asked whether he thought the current tensions, which have seen the two sides impose hundreds of billions of dollars of tit-for-tat tariffs on each other, could degenerate into all-out conflict, Cui said such an outcome was “unimaginable” and that the two countries should do everything to prevent it.
China did not want to have a trade war and sought a negotiated solution to the current impasse stemming from US President Donald Trump’s demands for far-reaching Chinese concessions to correct a massive trade imbalance, Cui said.
“But the key to this solution is a balanced approach to concerns of both sides,” Cui said. “We cannot accept that one side would put forward a number of demands and the other side just has to satisfy all these things.”
The two leaders had “a very good working relationship and personal friendship” formed in three previous face-to-face meetings, including two formal summits, and this had been shown by a long telephone conversation earlier this month, he said.
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