“Why buy US bonds at 4 percent when you can buy US bonds held by China at 5 percent? “
But wouldn’t the buyer of US bonds with a 5% interest rate have to pay a premium for them? Sorry, I should know this. I never took the time to figure out the market for held debt obligations.
That’s where the Chicoms lose money. They have to sell bonds at a value less than they would get if they kept them. That would, in their thinking, force the US to raise interest rates on our new debt, which would hurt our economy.
They might be right, but they would have to sell a big chunk of that trillion dollar bond debt, at a loss, to do that. I don’t think the wobbly Chicom economy can do that without a big economic seizure.