“They will do so by going into debt, or sell more US securities or a combination of both (most likely since China doesn’t have the same credit a Western nation has).”
I agree, but they have some problems. They don’t have near the US debt to sell that they used to have, but sell it they will. Which in turn will make the dollar weaker vs the Yuan which is exactly what they DON’T need right now.
And since oil and gas is traded in US dollars energy costs will go up. It takes more weak dollars to buy a barrel of oil.
Chinese borrowing is also problematic as they’ve been making more enemies than friends lately. So I expect monetary tomfoolery that will further weaken their economy. A struggling China will reverberate around the globe.
Right.
China will have to be extremely careful with its economic decisions right now.
I imagine the destabilized world economy would mean people will buy more US securities for the stability the USA has. So China might accept that gamble and drop US debt in order to destabilize the world economy enough that the US dollar goes up.
Not any more. Saudi just signed an agreement with Russia and China to accept rubles and yuan for oil. Bye bye PetroDollar.