Recently, I came across a pretty interesting topic being discussed—U.S. national debt has already surpassed $35 trillion, which means every American is carrying about $100k in debt. Even more astonishing, this debt exceeds 120% of the U.S. GDP.

As China is the second-largest foreign holder of U.S. debt, holding $771 billion in U.S. Treasuries, this raises a classic question: what would happen to the U.S. economy if China suddenly sold off all its U.S. Treasuries?

I noticed many people are particularly interested in this question, but the answer isn't as simple as it seems. First, although China's holdings of U.S. debt look large, they only account for about 2% of the U.S.'s total $35 trillion debt. But don’t underestimate this 2%; in the international financial markets, it can still cause quite a stir.

If China actually sold off all its U.S. Treasuries, the first effect would be a sharp increase in the supply of Treasuries, causing prices to drop directly. U.S. Treasury yields would rise, and investors would need higher returns to attract buyers. This would be a nightmare for the U.S. government because borrowing costs would spike, and the interest payments each year would increase.

More critically, there would be a chain reaction in the global economy. U.S. Treasuries are one of the cornerstones of the global financial market; a disturbance here can ripple across the entire system. Other markets would also become volatile, currencies of various countries might fluctuate, investors would panic and seek safe havens, and global trade order could be disrupted.

But here’s an interesting point—selling off U.S. Treasuries by China might not be good for China either. While it could exchange Treasuries for a large amount of cash dollars, it also risks the dollar depreciating. China is the world’s largest foreign exchange reserve holder, with substantial U.S. assets. If the dollar falls, China would also face significant impacts.

So, holding onto U.S. Treasuries without selling them off has become a form of economic diplomacy. It’s like holding a trump card that can be played at a critical moment. Compared to the consequences of outright selling Treasuries, what’s even more powerful is the ongoing de-dollarization movement worldwide.

Recently, a clear trend has emerged—nearly half of the countries worldwide are actively de-dollarizing. Emerging economies are leading the charge, recognizing the unfairness behind dollar hegemony and striving for greater economic autonomy. China is promoting the internationalization of the renminbi, and the BRICS countries have jointly developed new financial clearing systems to bypass traditional dollar reliance.

Honestly, de-dollarization poses a much bigger threat to the U.S. economy than China selling off Treasuries. Over the years, the U.S. has frequently used dollar hegemony to conduct economic extraction—printing money during economic hardships and implementing quantitative easing to flood the markets. This increases dollar supply, lowers interest rates, and makes it easier for U.S. companies and consumers to access funds.

But the problem is, the large amounts of dollars printed by the U.S. flow into other countries, especially those with relatively fragile economies. These countries borrow and spend when they see cheap dollars, even using them to pay off external debts. As a result, the U.S. economy temporarily recovers, but these countries accumulate huge dollar debts. When the Federal Reserve raises interest rates, international capital flows out of these countries back to the U.S.

From the lost decade in Latin America, to the Southeast Asian financial crisis, and recent economic turmoil in Argentina and Turkey, all have U.S. influence behind them. So now, dissatisfaction with dollar hegemony is growing worldwide, and de-dollarization has become an unstoppable trend.

China plays a crucial role in this process. As the world’s largest developing country and emerging economy, every step China takes can influence the global economic landscape. Compared to the direct impact of China selling off U.S. Treasuries, what truly changes the world economic order is this wave of de-dollarization.

I believe this topic reflects a deeper change—the international economic order is being reshaped. Whether it’s the U.S. debt issue or de-dollarization, fundamentally, countries are seeking more economic autonomy and influence. This process may be complex, but in the long run, it’s more beneficial than harmful for developing countries.