[GulfBreeze]

China could not possibly pull out 800Billion at once for a number of reasons.

1) Their wouldn't be a market for a single sale of bonds of that size and they would immediately lose 30% to 40% of their investment.
2) America could declare the move a hostile financial attack and either nationalize their holdings or place them in suspense. They would 'tacitly' lose 100% of their holdings.
3) They would lose what is left of their US markets and lose far more of than this puny debt.


China is engaging in a currency scam. It is foolish to pretend that it is not happening. Since this behavior is outside and manipulative of the free market. The free market cannot correct it.

[Kuehn12]

We don't know what they would do if the US really starts a trade war with China. Do you think that America would risk its "Good Faith and Credit" principle, and do something that communist do. Perhaps your right that the market value of the bonds would fall, but that would affect US treasuries more than the investment China has made. I don't know much about debt instruments but I know that face value of the bond is gaurantee along with a coupon rate, which they would lose. In any case, America would have to make good on it debt intruments because if it didn't it would risk losing vastly more cash from other foriegn investors