Analysis Of The Impact Of Holding US Treasury Bonds On China's Economic Development

The Chinese government,through the purchase of US Treasury bonds,is a relatively stable foreign exchange reserve investment method,while bringing relatively safe and stable returns,it cannot ignore the risks contained in the huge amount of US Treasury bonds.We need to start from the deep-seated reasons why China holds huge amounts of US Treasury bonds and analyze its impact on the Chinese economy.Today,when the world political situation is changing rapidly and Sino-US economic and trade frictions are constantly evolving and deteriorating,the Chinese government needs to maintain a cautious sense of urgency.It rationally and objectively uses economics to look at the Chinese economy behind China's huge holdings of US Treasury bonds.Impact and risks that may arise to the Chinese economy.Through teamwork and brainstorming,we will jointly propose constructive,targeted and operational strategies to promote the smooth and healthy development of China's economy and prevent the occurrence of systemic financial risks.In order to analyze the above-mentioned problems more objectively,this paper uses basic economic theory to conduct qualitative analysis and discussion on the impact of China's huge US Treasury bonds on China's economic development.On the other hand,the time series model in econometrics is used to quantitatively study the impact of China's holding of US Treasury bonds on China's relevant economic indicators.First of all,this paper briefly expounds the historical process and status quo of the formation of US Treasury bonds,and specifically analyzes the reasons why the US federal government issued huge amounts of US Treasury bonds,that is,the initial issuance of war funds to start a large number of issuances,and then to meet the US economy.Rapidly growing demand and starting the road to scale expansion.Secondly,from the perspective of China,this paper studies the current situation of holding US Treasury bonds and the reasons for holding huge amounts of US Treasury bonds: First,the rapid growth of China's foreign exchange reserves,and second,the US Treasury bonds under the US dollar-dominated international monetarysystem.The characteristics of the advantages,the third is that China is inseparable from the perspective of political security.Thirdly,we study the impact on China's economy from the perspective of the benefits and risks of holding US Treasury bonds.On the one hand,the analysis of the actual rate of return on China's holding of US Treasury bonds needs to eliminate the exchange rate fluctuations of the RMB against the US dollar and the inflation rate in the United States.At the same time,the choice of US Treasury bonds should balance stability,safety and mobility.Sex,as well as the need to combine the opportunity cost,whether the yield of China's holding US Treasury bonds can be higher than that of other forms of investment;on the other hand,China has huge foreign exchange reserves for investing in US Treasury bonds.Some of the risks brought by this can not be ignored,mainly the risk of two-way fluctuation of RMB exchange rate against the US dollar,the risk of excessive actual cost and opportunity cost,the risk of insufficient debt repayment ability of the US federal government,and the political and economic interdependence of Sino-US malformation.The risks generated.Next,after conducting a qualitative research analysis,a quantitative empirical study of the impact of US-owned US Treasury bonds on the Chinese economy through a time series model shows that if China continues to increase its holdings of US Treasury bonds,it will inevitably lead to China.Further increase the supply of money,the appreciation of the renminbi,the rise in inflation and the increase in foreign direct investment.Furthermore,it is concluded that the adverse effects of China's continued increase in US Treasury bonds are mostly relative to favorable impacts.China needs to adopt a prudent and gradual approach to effectively avoid risks by slowly reducing US Treasury bonds.Finally,this paper proposes a solution corresponding to the empirical analysis results from China's own point of view,and proposes that China should be based on the background of Sino-US economic and trade relations in dealing with US Treasury bonds,and promote the internationalization of the RMB and increase the diversification of reserve assets.And to expand domestic demand,accelerate thestructural upgrading of the export industry and other measures,and take measures to enhance China's ability to cope with risks in response to the risks posed by huge US Treasury bonds.The possible innovation of this paper is to combine the background of the Sino-US economic and trade frictions since 2018.From the perspective of analyzing the impact of China's huge US Treasury bonds on the Chinese economy,the Chinese government has lowered the US As a means of countering the Trump administration's measures to impose tariffs,treasury bonds are analyzed and researched to explore hot issues.At the same time,it is also limited by the limitations of knowledge reserve and international vision.There are still problems of insufficient depth,incomplete understanding and poor theory for the analysis of problems.This is the direction for further study and efforts.