The rapidly escalating tensions between China and Japan over the disputed Senkaku islands has just gotten real, as the Telegraph’s Ambrose Evans-Pritchard reports that a Chinese advisor has publicly called for the nation to DUMP en-masse it’s entire holdings of Japanese bonds. All $230 billion!
It appears the Fed’s QE∞ of $40 a month (+ PRN printing) may soon become $1.14 TRILLION a month should China decide to also dump it’s $1.1 Trillion in US treasury bond holdings, which appears like a likely progression considering the US announced Tuesday that it will back Japan should the nation be attacked over the disputed islands.
Beijing hints at bond attack on Japan
A senior advisor to the Chinese government has called for an attack on the Japanese bond market to precipitate a funding crisis and bring the country to its knees, unless Tokyo reverses its decision to nationalise the disputed Senkaku/Diaoyu islands in the East China Sea.
Jin Baisong from the Chinese Academy of International Trade – a branch of the commerce ministry – said China should use its power as Japan’s biggest creditor with $230bn (£141bn) of bonds to “impose sanctions on Japan in the most effective manner” and bring Tokyo’s festering fiscal crisis to a head.
Writing in the Communist Party newspaper China Daily, Mr Jin called on China to invoke the “security exception” rule under the World Trade Organisation to punish Japan, rejecting arguments that a trade war between the two Pacific giants would be mutually destructive.
Separately, the Hong Kong Economic Journal reported that China is drawing up plans to cut off Japan’s supplies of rare earth metals needed for hi-tech industry.
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Don’t worry Uncle Ben will buy those off the hands of China. As long as Japan buys more T-Bills!
It is only paper! When they stop trading commodities, then you know it is for real.
Is there anything going right in any part of the world? The chaos in Europe, the insanity in the Middle East, and now the riff between Japan and China. And who is leading us above all of this???? NO ONE! Good grief the lights are not even on at the White House because the tenant is late night with David Letterman. DOn’t you feel safe with such strong leadership??? Gasp!!!!
You got that right snowrider. Obama is in a windsprint to the elections and doesn’t care about anything going on in the world today There is nothing he can do about it, nothing he cares about except getting reelected and thinks the American people are too stupid and blind to see or care about world events.
I’m sure that they will use that amount to buy physical commodities. This shows that Chinese know about real wealth. When the USA will collapse, China will become the number one economy in the world.