The sell-off started with a mysterious plunge overnight

US Debt held by Foreign Sources is about 30% of overall debt. China holds ~ 25% of that which would be about 7 1/2% of the overall debt....article says 5.6% I’m sure it fluctuates.

https://www.marketwatch.com/story/heres-who-owns-a-record-2121-trillion-of-us-debt-2018-08-21

Article is a little over 3 months old.

“Nah - too many nanosecond computers doing the trading and all have similar algorithms telling them what to do”

You are right - it would be cheaper for the Chinese to manipulate our markets with a sophisticate cyber attack, than by using their own money.

Much greater deniability as well, to better mitigate the possible punitive counteractions.

No doubt they have been wargaming and strategizing for many years.

How about a scheme as simple as this...

The day after the G20 the Yuan gained 10% againt the dollar and it’s assumed this was from Chinese purchases of US Treasuries to support the Yuan.
Something Trump would want.

When the market is shook by this arrest (with a little help from China propaganda machine) and Treasuries prices rise- China sells off at a profit!

[I have little doubt that China can ruin us economically because they own all our debt, which our government is addicted to.]

Others have pointed out that China owns 7.5% of outstanding Treasury debt. It’s an even smaller chunk of total debt outstanding (including mortgages, etc), about 2.5%. China owns Treasuries not because it likes us, but because they need to keep a good chunk of their foreign exchange earnings in dollars in order to prevent their currency from appreciating even further. Incomes there have gone up almost 10x (in dollar terms) in the past 30 years. A lot of Chinese manufacturing operations are becoming more costly than their Indian, Mexican, Vietnamese, Cambodian, Filipino and Indonesian counterparts, because of skyrocketing Chinese land and labor costs. That is why it is a matter of great urgency for them to keep the yuan cheap against the dollar. That means not selling their dollar currency holdings to buy yuan. So those dollar holdings earn some interest, they buy US Govt Treasury debt and Agency securities (bundled Fannie Mae, Freddie Mac mortgage debt).

[But a USA with an economy in rubble would leave China with their own problems. They are far too dependent on the USA as a market, way more than we are on them (because they won’t open their markets to us).]

China doesn’t so much depend on the US to buy Chinese products as it relies on US multinationals to build plants in China to re-export the products they make there to the US. China’s relationship to the US is that of a house cleaner to a white collar office worker. Those tariffs are straining that relationship to the max. 25% tariffs on an $800 iPhone will prompt Apple to move its assembly plant out of China, perhaps to the Philippines or Indonesia. As it is, Adidas and Nike have moved a good deal of sneaker production for the US market out of China for cost reasons. A 25% tariff on smartphones would cause all US-bound smartphone production to leave China.

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