China will have to get ahead of this by bailing out Billions in cash.
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).
Will they ?? I’m not sure, let me offer another possibility.
Recently China supposedly cracked down a number of companies that had either gone public on the NYSE or were about to go public. what was the result of that, especially for the companies that had already gone public, the equity holders of those companies already collected their billions primarily from Pension funds in the USA, who took some major loses...
China will bail out their citizens who invested in these Property Development companies to keep them from rioting, but any foreign investors will get screwed, what is the result of that, unrest and chaos in Western Economies and who does that help ???
IMO, China allowed these companies to borrow recklessly sucking in capital from all over the world, building all kinds of properties in China and then folded them screwing Western Investors in process....
It’s interesting right in the middle of a Chinese Created pandemic when Western Economies are in real trouble, China starts to experience debt problems, especially when a lot of that debt is held by Western Economies....coincidence ??? I don’t believe in them...
“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.