Reverse financial defense war, is China starting the project to blow up U.S. bonds? The thing that the U.S. fears the most is happening.
In the unequal conflict between Russia and Ukraine, no one expected it to still be ongoing until now. However, recently, Russia, Ukraine, and the Western countries behind them are showing signs of fatigue.
The U.S. did not expect to use Ukraine to dismantle the Russian-German alliance or to break apart the Russia-EU alliance. In the end, it succeeded, but the U.S. itself has also become somewhat fatigued from this conflict.
Meanwhile, with high U.S. debt and worsening deficits, the U.S. that tried to pressure China with tariffs did not expect that China was firing the first shot in blowing up U.S. bonds in its own way.
Reverse financial warfare
As the Russia-Ukraine conflict drags on, the Governor of the Central Bank of Russia has stated that Russia's economic resources are nearly exhausted, while Ukraine's missile stockpiles obtained from the U.S. are also running low. They want to get more from the U.S., but the U.S. bluntly says it doesn't have much left either.
As for the EU, which bullies others behind the scenes, it is always on guard against Russia's nuclear weapons. After all, they went too far before and now demand that Russia cannot do the same; it is indeed a bit of self-inflicted pain.
If this continues to drag on, it is hard to say who will laugh last. After all, a protracted war is very costly, and from Putin's recent budget announcement, it is clear he is still preparing for a prolonged conflict.
In this conflict, although the U.S. did not directly participate, it has provided considerable assistance to Ukraine, whether in weapons or funding. However, given the outflow of funds, Americans' living standards seem unaffected. On the contrary, American consumer spending remains strong, supporting economic development.
From another perspective, this cannot be separated from the support of the Chinese.
As the world's factory, China not only competes in quality but also in price. China's exports have generated income, and the affordable products have also brought benefits to the U.S.
However, the dollars we earn cannot be used to buy American high-tech products.
The U.S. launched a financial war against China, while China puts the money it earns into the U.S. financial system to earn interest, which fundamentally still helps the U.S.
Clearly, under the strong dollar and the maintenance of hegemony, the world seems to revolve around the U.S.
The only benefit gained from this is that China is using the money earned to begin industrial upgrading and layout globally, while also purchasing materials with dollars.
In such circumstances, since the dollar cannot be exchanged for what we want, why not use the surplus benefits from the dollar to gain advantages from other countries or even the U.S.?
This seems to have become the logic behind China's reverse financial war.
Is the first shot in blowing up U.S. bonds being fired?
In fact, what China is doing is something the United States is naturally unwilling to accept, but America's debt has become the biggest obstacle to competing with China.
Before Trump even took office, he was already planning to establish a government efficiency department to cut spending, fundamentally because the U.S. government has no extra money to do other things.
But looking at China, it suddenly launches an intercontinental missile and plans to build houses on the moon. Meanwhile, the U.S. says it wants to turn India into the second China. Given this situation, where will the U.S. find extra money to aid India, let alone reshape a new order in Asia?
Today, China has laid out this grand strategy, which is to use the dollars earned to gradually occupy an important position in the global supply chain. If the U.S. wants to compete, it means the U.S. has to spend money.
In the past, Americans could exchange a few dollars for Chinese goods, but now, Trump has cut off this avenue and is imposing tariffs on China. From another perspective, Americans have rejected their own benefits, resulting in the resurgence of inflation in the U.S.
However, under high inflation, how can the U.S. compete with China for manufacturing jobs?
The manufacturing industry pursues high-quality delivery at an extremely high cost-performance ratio.
Where will the U.S. get money to develop its manufacturing industry?
Unless the U.S. continues to borrow money, this way of playing will only cause the scale of U.S. national debt to continue to soar. In the end, who will still believe in such a Ponzi scheme?
The U.S.'s financial war against China aims to strike at China's demand side, while China's reverse financial war seeks to accelerate the soaring scale of U.S. national debt and resource misallocation.
In the past, the U.S. acted recklessly, mainly because it could issue bonds to obtain large amounts of funds when it ran out of money. Once debt soared and the Ponzi scheme grew larger, who would still foolishly invest in U.S. bonds?
China is spending money to compete to be the price setter in the next industrial technology revolution, while the U.S. is spending money to maintain its hegemony.
The more critical issue is whether the so-called democratic U.S. can reach a consensus on financial matters? Perhaps it is just each capital for its own interests.
Sullivan has called on Trump to increase defense spending and specifically used China as an example, stating that if the U.S. goes to war with China, its ammunition will soon be exhausted. Clearly, the greater the anxiety the U.S. has toward China, the more money it will have to pour in, inevitably increasing U.S. debt.
In modern history, the game between great powers often does not end with military force. Instead, achieving victory without fighting often involves using strategies to create problems for the opponent, leading to their decline or disintegration. The U.S. is well aware of this issue, as the Soviet Union is a prime example.
