China threatens 'nuclear option' of dollar sales
By Ambrose Evans-Pritchard
Last
Updated: 9:54am
BST 08/08/2007
0
The Chinese
government has
begun a concerted
campaign of
economic threats
against the United
States, hinting
that it may
liquidate its vast
holding of US
treasuries if
Washington imposes
trade sanctions to
force a yuan
revaluation.
 |
|||
|
|
Two
officials
at
leading
Communist
Party
bodies
have
given
interviews
in
recent
days
warning
-
for
the
first
time
-
that
Beijing
may
use
its
$1.33
trillion
(£658bn)
of
foreign
reserves
as
a
political
weapon
to
counter
pressure
from
the
US
Congress.
Shifts
in
Chinese
policy
are
often
announced
through
key
think
tanks
and
academies.
Described
as
China's
"nuclear
option"
in
the
state
media,
such
action
could
trigger
a
dollar
crash
at
a
time
when
the
US
currency
is
already
breaking
down
through
historic
support
levels.
It
would
also
cause
a
spike
in
US
bond
yields,
hammering
the
US
housing
market
and
perhaps
tipping
the
economy
into
recession.
It
is
estimated
that
China
holds
over
$900bn
in
a
mix
of
US
bonds.
Xia
Bin,
finance
chief
at
the
Development
Research
Centre
(which
has
cabinet
rank),
kicked
off
what
now
appears
to
be
government
policy
with
a
comment
last
week
that
Beijing's
foreign
reserves
should
be
used
as
a
"bargaining
chip"
in
talks
with
the
US.
