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Can China Threaten to Dump US Treasuries ? NO they Cant.

Here is why…
Only problem with "China to dump USTs" theory is that....China is actually short USDs. So, in effect, China does not have any USTs to sell. It has duration mismatch, but that is all. Overall China is effectively short USTs....oops.
It also appears they've been using Eurodollar markets to lend USDs against real assets, for much of the past decade. China's net USD is far from clear (per Reinhart), but this article (first Tweet) makes the point they've effectively been swapping USTs for commodities
Investors tend to Forget that China's liability side in USD which is X times larger than UST holdings (which they use as reserves to multiply liabilities)
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