.. holds a significant portion of the US debt through treasuries, and has an export-driven economy that would grind to a halt if it de-coupled from the US. Pretty simple case of dependency.



I can't help but disagree. All China needs to do is to dump its massive holdings of dollars it has in reserve or from the sale of US dollar-dominated financial instruments. The Fed can print dollars with which to purchase the dumped Chinese holdings, but the Fed cannot print foreign currencies with which to buy up the dumped dollars. The massive supply of dollars dumped in the exchange market by China would have no takers. The dollar’s value would collapse. Washington could no longer pay its bills by printing money. Americans living in an import-dependent country, thanks to jobs offshoring, would be faced with high prices that would seriously erode their living standard.If the Chinese can produce it, they can afford it. Its the Chinese government that is stealing their purchasing power and giving it to Americans to buy the goods being imported. Its really the Americans who cant afford it in my opinion.Would love to hear BMs take on this.