“By selling huge quantities of U.S. Government Bonds, of course.
Gee, the price of those bonds might go down fast.”
I don’t want anyone to think I’m particularly fond of the Chinese Imperialist/Mercantilist Government, and I have long been of the opinion that any American who tries to do business with the Chinese will always be played for the fool that he is.
Having said that, though, for better or worse the Chinese have coupled their economy to ours. Sure, they could try to have a fire sale on American bonds, but that destroys our economy, and their most lucrative export market. Also, they dump the bonds and lose money, which impairs their financial condition.
I don’t see them doing it out of their own self-interest. I think they’ve been wanting to de-couple from us since 2009 when they saw we had no serious government fiscal policy, but they haven’t figured out how. Not yet anyway. Dumping our bonds would be one way to do it, but I don’t think they could stand the pain.
Simply put, they would have to sell those bonds like selling a house at a deep discount, almost giving it away.