How does a country attack national debt and foreign currency debt?
China has a relatively balanced foreign trade, its balance of payments surplus with the United Status is enormous, approximately 250 billion dollars. The United States finances this deficit by issuing currency it recovers as a result of the purchase of public US securities by China. China, meanwhile, has to issue currency in order to absorb the excess dollars, which poses the risk of an inflationary stampede. . On the other hand, if the US balance of payments deficit persists, a devaluation of the dollar could come about which would oblige China to sell the US securities it holds. This would accentuate the devaluation of the dollar and the possibility of a financial crisis in the United States. China and the world economy find themselves at an impasse, because China can only evacuate its internal tensions by unbalancing international economic relations and, inversely, a re-equilibrium at China’s expense would leave the regime with its days counted.
