The US uses dollars to buy Chinese goods, and China receives dollars. Then, China uses those dollars to buy US Treasury bonds, and the dollars return to the US. The US then uses those dollars to buy Chinese goods again, China receives dollars, and buys US Treasury bonds again. This cycle continues, allowing the US to obtain the Chinese goods they want with a series of numerical Treasury bonds. It's as simple as that.

This cyclical model has many issues and potential risks. First, the US Treasury bonds held by China are not without risk; changes in the US economic condition, monetary policy, and political situation can all affect the value of these bonds.

Secondly, over-reliance on this trade and financial cycle may impact China's own industrial upgrading and innovation. Long-term reliance on cheap labor and resources to export large quantities of goods, while only exchanging them for increasing amounts of US Treasury bonds, is not a good strategy for the sustainable development of China's economy.

Moreover, from the perspective of the global economic landscape, this unbalanced trade and financial relationship is also detrimental to the stability and healthy development of the world economy. When the US economy fluctuates, this cycle could trigger a global economic crisis.

In the future, China needs to focus more on enhancing the added value of its own industries, strengthening technological innovation, promoting the internationalization of the yuan, and gradually breaking this unreasonable cycle to achieve a more equitable, stable, and sustainable international trade and financial order.

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