Tue 21 May 2019 / Asia Pacific
Renminbi 'weaponisation' talk overblown
A media furore has flared over whether China will dump US Treasury holdings or 'weaponise' the renminbi. The debate is entertaining, but misses the mark. In spite of much rumour and conjecture, in the past China has consistently neither acted to 'dump' or 'weaponise' its Treasuries, nor shown interest in doing so. Instability is anathema to Chinese leaders and portfolio managers. It's contrary to their self-interest. A sell-off could ratchet up US Treasury yields, imposing massive capital losses on Chinese official dollar holdings.