Why China Buys U.S. Debt With Treasury Bonds
China has been steadily accumulating U.S. treasury securities for decades. Additionally, trade data from the U.S. Census Bureau shows that China has been running a big trade surplus with the U.S. since 1985. This means that China sells more goods and services to the U.S. than the U.S. sells to China. The question is, is China—the world’s largest manufacturing hub and an export-driven economy with a burgeoning population—trying to “buy out’ the U.S. markets through its debt accumulation, or is it a case of forced acceptance? This article discusses the business behind the continuous Chinese buying of US debt. Chinese Economics China is primarily a manufacturing hub and an export-driven economy. Chinese exporters receive U.S. dollars (USD) for their goods sold to the U.S., but they need Renminbi (RMB or Yuan) to pay their workers and store money locally. They sell the dollars they receive through exports to get RMB, which increases the USD supply and raises demand for RMB. China&