Recently, I've been paying attention to a quite interesting phenomenon: the size of U.S. national debt has already surpassed $35 trillion. How outrageous is this number? On average, every American is carrying $100k in debt. Even more astonishing, this debt has exceeded 120% of the U.S. annual GDP. To put it another way, even if Americans didn't eat or drink for an entire year and used all their income to pay off debt, they still wouldn't be able to pay it off.

Looking at this situation, the U.S. government has indeed been extravagant over the years. Infrastructure construction, social welfare, military spending—everywhere requires money. With their own wallet not being enough, they borrow from the whole world. As a result, now global investors and governments have become U.S. creditors.

Interestingly, the U.S. relies on its strong economic power and the dollar's status to maintain the ability to "print money to pay debts." They ease debt pressure through interest rate cuts, quantitative easing, and other measures. But the cost of this approach is inflation risk, which ultimately makes the global economy pay the price.

At this point, I have to mention the topic of China selling off U.S. Treasuries. According to reports, China is now the second-largest foreign holder of U.S. debt, holding $771 billion. Although this accounts for only 2% of the massive $35 trillion U.S. national debt, that 2% can still cause quite a stir in the international financial markets.

I've been thinking: what would happen if China suddenly announced to sell all its U.S. Treasuries? First, the supply of Treasuries would surge, causing prices to plummet. Yields would rise accordingly, significantly increasing the U.S. government's borrowing costs, and the interest payments each year would be higher. This would directly hit the U.S. economy.

But the deeper impact is that the global financial markets would experience a chain reaction. U.S. Treasuries are a crucial cornerstone of the global financial system; a disturbance here can ripple through everything. Other countries' currencies might fluctuate, investors would panic and seek safe havens, and global trade order could be disrupted.

For the U.S. itself, if the financial markets become volatile, the entire economy would suffer a huge blow. Corporate financing costs would rise, investments would decrease, and economic growth would slow down. Most critically, the U.S. government's credibility would be questioned, making it harder to borrow money in the future.

Interestingly, the consequences of China selling off U.S. Treasuries are not beneficial for China either. While they can exchange Treasuries for cash in dollars, the risk of dollar depreciation also looms. As the world's largest foreign exchange reserve holder with substantial U.S. assets, a decline in the dollar would lead to significant losses for China.

Therefore, holding onto U.S. Treasuries without selling them off is actually a smarter move for China than dumping everything. It has become a form of economic diplomacy—like holding a trump card that can be played at critical moments.

Compared to selling off Treasuries, the biggest blow to the U.S. economy is actually "de-dollarization." Recently, countries worldwide have been pushing forward with de-dollarization efforts, with reports indicating nearly half of the countries have started. Emerging economies are taking the lead, and China is promoting the internationalization of the renminbi. The BRICS countries have jointly developed a new financial settlement system, bypassing traditional financial messaging networks, reducing dependence on the dollar.

Over the years, the U.S. has frequently used dollar hegemony to carry out economic "harvesting." Whenever the U.S. economy faces difficulties, the Federal Reserve opens the printing presses, and dollars flow worldwide. Countries with relatively fragile economies borrow money to invest, accumulating large amounts of dollar debt. When the U.S. economy recovers and the Fed raises interest rates, international capital withdraws from these countries and flows back to the U.S. From the "Lost Decade" in Latin America to Southeast Asia's financial crises, and recent economic turmoil in Argentina and Turkey, all have U.S. fingerprints behind them.

Thus, dissatisfaction with U.S. dollar dominance is growing among nations. While de-dollarization isn't an overnight process, the current trend appears unstoppable. China plays a pivotal role in this process. As the world's largest developing country and emerging economy representative, China's every move could influence the global economic landscape.

Honestly, the issue of China selling off U.S. Treasuries reflects a bigger problem— the ongoing reshaping of the global financial order. Instead of fixating on selling Treasuries, it’s more important to focus on the deeper shift toward de-dollarization. This will have a more profound impact on the long-term international economic pattern. If you want to dive deeper into these market trends and related asset performances, there are plenty of analyses and data on Gate for you to explore.