On October 1st, when people all over the country were celebrating the birthday of their motherland, the old Americans on the other side of the ocean felt particularly uncomfortable. Because in the early hours of this morning, The federal government is closed.
After September 2025, China will continue to sell U.S. bonds, continuing to "strengthen" the United States. The United States also seems to be "strengthening" itself, directly "destroying" it and "shutting down" the federal government.
The “closure” here is not simply the closure of the White House, but represents the suspension or delay of some of the public services provided by the government, which is equivalent to pressing on the day-to-day operation of federal government departments.
Who has been overdrawn in the dispute between the two parties?
This shutdown of the U.S. government was by no means an accidental technical failure; it was more like a regular political drama, behind which the country's credibility was constantly wasted in the struggle for party polarization.
In the mountains, Democrats and Republicans argue about the funding of social welfare, medical insurance subsidies, foreign aid and even immigration law enforcement.
The consequences of this zero-sum game were catastrophic, and even the previous failure to pass the “temporary allocation bill” used to temporarily “extend” the term, directly led to the federal government’s stagnation on the first day of the start of the new fiscal year.
This has long been not new, and since the 1970s, similar scenes have been featured more than twenty times. It exposes a profound structural flaw: the American political system seems to have lost the basic ability to effectively manage the national money pocket.
There is a more cruel reality behind the reason why politicians haggle over every ounce on the budget. The United States is burdened with a national debt of up to $37.46 trillion. This astronomical figure is equally spread to every American citizen, which is about $108,000.
State debt is still at a rate of about $5.1 billion a dayThe dispute between the two parties, in essence, is only in the face of a almost empty pocket of money, performing a power game to the voters.
The consequences of this internal disability are impacting the entire society in the most direct way. More than a million military personnel are ruthlessly defaulted on their wages, and military families even have to queue up to receive relief food to make ends meet.
About 750,000 federal employees are forced to go on unpaid leave, resulting in a daily salary loss of up to $400 million. Not to mention that tourist attractions such as national parks were forced to close, public services such as passport processing came to an abrupt end, and the distribution of relief funds for millions of low-income families was also in jeopardy.
Self-consumption of national credit
How can a government that can’t even guarantee its own employees’ salaries, its so-called “risk-free” bonds, make global investors feel absolutely safe?
The 35-day shutdown during Trump's last administration caused more than $10 billion in direct losses to the US economy. Now, the chaos is playing out again, and the key economic data can't be released on time, which even directly interferes with the decision-making process of the Federal Reserve in formulating monetary policy.
For ordinary Americans, they have long been numb and tired of this irresponsible manipulation by politicians. In the eyes of the international community, this political stalemate has seriously weakened confidence in the financial reliability of the United States.
Although the state government can assume some functions, and core institutions such as the military will not be completely paralyzed, this repeated self-consumption is eroding the credibility foundation of the US dollar and US debt little by little.
Silent pressure from Eastern creditors
While the United States is in chaos in governance, a powerful force from the East is reshaping the global financial landscape in a calm and prudent way.
China, the once largest creditor of the United States, is shifting the huge amount of U.S. debt held in its hands from the past to stabilize bilateral relations, and quietly transforming it into a "strategic play-off" for influencing and expressing demands.
This is not a momentary stress response, but a thoughtful national strategy. This round of massive cuts began in 2022, and in the past three years, China has cumulatively sold US bonds worth $30.96 billion. Sold $25.7 billion in one month。
Today, China’s holdings have dropped to more than $700 billion, the lowest level in 15 years, down almost a third from its historic peak.
In the ranking of global creditor countries, China has also slipped from its former top position to third place, behind Japan and the United Kingdom. Interestingly, when Japan and the United Kingdom had to increase their holdings of U.S. debt under pressure from the United States, China's reverse operation was particularly eye-catching.
China's way of selling is remarkable. it is not panicking to sell, that practice will only cause severe turmoil in the market, hurting the enemy a thousand and losing eight hundred.
Instead, Beijing adopts a carefully controlled pace of "slow-selling" strategy. Its purpose is very clear: while gradually reducing its own credit risk to the dollar and adjusting the structure of foreign exchange reserves, it will send a clear signal to Washington that this is a kind of "hidden pressure" intended to warn rather than destroy.
A set of combination boxing combining virtual and real
The sale of U.S. debt is not an isolated operation, but a part of a whole set of strategic “combinations”.On the one hand, it reduces holdings of U.S. debt, and on the other hand, the central bank of China has increased its gold reserves for ten consecutive months.
In the midst of this decrease, China’s strategic intention to hedge dollar risks and diversify assets is clearly outlined.The ultimate goal is to gradually reduce the excessive dependence on the dollar in the field of reserves and settlement, paving the way for the internationalization process of the RMB.
Whenever the United States wields a tariff stick or takes other pressure measures, China's reduction actions can often bring subtle changes in the attitude of the United States. The U.S. Treasury Department has publicly stated many times that it hopes to "resume constructive dialogue" with China.
Even the Trump administration, in the face of huge economic pressure, also actively expressed the desire to visit China and to meet at the APEC summit. Some experts pointed out clearly that China's "trigger" has indeed worked. In addition to industrial goods and rare earth, US debt has become another "bottom line" forcing China to return to the negotiating table and directly communicate economic demands.
conclusion
The significance of this game around U.S. debt has long surpassed the competition between China and the United States. Of course, the United States still wants to maintain its hegemony, but it seems that strength does not allow it. The myth of "absolute security of U.S. debt" that was once regarded as the norm has been completely bankrupt in the face of facts.
According to the data of the International Monetary Fund, the share of the US dollar in global foreign exchange reserves has dropped to 56.32%, the lowest level since 1995. This is not just a cyclical move, but a structural shift that the market votes with its feet to give.
At this moment, the United States has to cope with both domestic political impasse and international capital confidence, and China’s financial strategy learns: The dollar hegemony is not unstoppable.。