China exports $2.5 trillion annually (2018) and imports $2.1 trillion. $5 billion is not that big a deal in the short term.
On top of that, their dollar reserves are in even worse shape. When everyone is scrambling to buy bonds now, China is selling them like there is no tomorrow in exchange for dollars because no one wants yuan. They can’t do that for very long and soon enough their imports will start to suffer.
The U.S. debt to China is $1.07 trillion as of December 2019. That's 16% of the $6.7 trillion in Treasury bills, notes, and bonds held by foreign countries. They can always sell T-bills to get dollars. T-bills are not that great of an investment now that the Fed has lowered interest rates to almost zero.
China holds reserves of foreign currency and gold of $3.236 trillion (31 December 2017 est.) Most of their imports involve energy (oil, gas, and coal) and agricultural products. The top five import partners are South Korea 9.7%, Japan 8.6%, US 7.3%, Germany 5%, and Australia 4.9% (2018).
A strong dollar will hurt imports, but the Chinese will use the weakness of the Yuan and the strength of the dollar to gain a competitive advantage. The current low cost of energy will also help their exports and imports. The Russian-Saudi deal today could change that.
So this peaked my interest some more and I’ve been reading up on it.
Three trillion in reserves won’t last the Chinese long. They’ve never shown any hesitation to ‘loan’ that money to any domestic company that promised to keep people employed. Currently they’re going at about a rate of $100 billion a week. Second, I hardly trust their numbers so I went looking after what we can prove. Apparently their container exports are already down 17% from this time last year and are still dropping. Reuters says it’ll be down 30% at the low end.
Ask of last week 25% of Chinese firms reported orders were down at least 50% and most of their activities were processing backlog orders. Again people are ‘at’ work but commodity orders and prices have both dropped and according to Bloomberg the average state owned enterprise is only operating at 75% (numbers again I don’t trust).
As for entergy prices, they help them as much as they help us...as in they mitigate the pain but don’t help all too much. No one’s flying, driving, shipping, etc. They do save money on oil imports from the middle east, who of course demand dollars.