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Re: Question about US/china relations
The US would find it very hard to finance its debt (govt bonds continually mature and they have to keep rolling it over, along with issuing new debt), so the interest we would have to pay would go way up. The value of China's holdings would drop sharply (when interest rates go up, bond prices go down), so they would get a much lower return than the otherwise might have gotten by not dumping all their US bonds.
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