In the US-China tariff struggle, will China use $760 billion in US Treasury bonds as a weapon?

With the hardline stance and mutual unwillingness to back down on tariffs between China and the U.S., China reiterated its vow to "fight to the end" last Friday, but suspended the further increase of tariffs on the U.S., stating that the actions of the Trump administration are a "joke" and not worth matching. Shuli Ren, a Bloomberg Asia markets columnist and former investment banker, believes that Trump's tariff reversal exposes his core weakness. Beijing can easily undermine the U.S. safe-haven status and mentioned the $760 billion in U.S. Treasury bonds it holds.

China holds 700 billion USD in US debt, Besant claims there is no need to worry about the size of US debt.

As the second largest holder of U.S. debt, China currently holds $760.8 billion in U.S. bonds. Last week, the yield on the 10-year Treasury rose by 50 basis points to 4.49%, marking the largest weekly increase since 2001. Some of the most dramatic fluctuations occurred during the Asian trading session, sparking speculation about Beijing's involvement in the market. Will China weaponize its assets and sell off?

U.S. Treasury Secretary Scott Bessent ( set aside these concerns. In a recent interview with Tucker Carlson, he discussed the wonders of being the world's largest borrower.

"If you take out a loan from the bank, the bank is in control, and they can reclaim anything you borrowed. However, if your loan is large enough, you somewhat override the bank."

Trump's tariff policy takes a sharp turn, exposing America's fatal weaknesses.

But Trump's dramatic turn on tariffs exposed the fatal weakness of the White House: after witnessing the plummet of U.S. bonds, Trump's aides convened an emergency meeting and postponed additional tariffs on all countries except China.

)What prompted Trump's delay on tariffs for 90 days? Morgan Stanley's Dimon and hedge fund mogul Ackman surprisingly became key players in this matter(

After all, Bessent, who is leading the tariff negotiations, needs a stable bond market to sell in. His department needs to issue about $2 trillion in new debt this year, and also needs to roll over about $8 trillion in maturing bonds. For every basis point increase in yield, the government loses about $100 billion.

Under anti-American sentiment, the US dollar and US Treasury bonds have lost their safe-haven status.

Shuli Ren believes that Beijing does not even need to sell so many U.S. bonds to continue the bear market narrative. If Trump is determined to use high tariff barriers to turn his country into an economic island, then it makes sense that foreigners no longer need to hold so many U.S. dollars.

The US dollar has lost some of its dominance in international trade and finance. According to data from the International Monetary Fund )IMF(, the dollar's share of global reserves has declined from over 70% two decades ago to 58% last year. Setting aside trade tensions, the indecisiveness of the Federal Reserve has led to a lack of stable total returns on US Treasury bonds in recent years.

Last week, there were also reports that the People's Bank of China increased its gold reserves for the fifth consecutive month. This has triggered a frenzy of buying, with more people betting that gold is more attractive than the US dollar. In fact, during this wave of trade wars, gold has played an increasingly important role as a safe haven and continues to set new highs.

In other words, in this turbulent environment with rising anti-American and anti-bullying sentiments, the People's Bank of China can easily undermine the safe-haven status of the dollar and bonds without much effort. Global investors are eager to look elsewhere. For example, Canada’s largest pension fund is viewing Europe as an attractive alternative capital location.

This article discusses the US-China tariff struggle. Will China use $760 billion in US Treasury bonds as a weapon? Originally published in Chain News ABMedia.