- China Prepares Its “Nuclear Option” In Trade War
by Simon Watkins, https://oilprice.com/
As the trade war with the U.S. continues to escalate, China has re-engaged with Iran on three key projects and is weighing the use of what both Washington and Beijing term the ‘nuclear option’, a senior oil and gas industry source who works closely with Iran’s Petroleum Ministry told OilPrice.com last week.
If there is any further pushback from the U.S. on any of these Chinese projects in Iran, then Beijing will invoke in full force the ‘nuclear option’ of selling all or a significant part of its US$1.4 trillion holding of U.S. Treasury Bills, with a major chunk of the paper due to be sold in September on this basis. This massive holding of these bonds – through which the U.S. finances its economy and is an important factor both in the value of the dollar and therefore in the health of U.S. international companies especially – has been used as a bargaining chip before by China, especially when it feels threatened. Back in 2007, just before the great financial crisis, a number of senior Chinese figures at various state-run think tanks – through which China often signals its big geopolitical threats – stated that the large-scale selling of this massive Treasury Bill holding would trigger a dollar crash, a huge spike in bond yields, the collapse of the housing market and stock market chaos.