What would happen if China called on its loan to the US?

Obviously the US would be stuffed but would it simply go to war with China then? Nothing to lose and all that... Would the allies of the US also go to war with China or actually switch sides as they know where their bread is buttered? It could also be convienient for certain US allies...

I guess the US would see it as an act of war but would China not be well within their rights to do this? Of course they won't - not only for the implications described, but the fact they are pretty reliant on the US themselves.

Reply 1

Clip

19

China would be finished, because no one would ever trust it as a creditor again. And why would they call their loans?

Anyway, how did you get from "We want our money back" to "Ok, well we're going to war, then."?

(edited 12 years ago)

Reply 2

0906079

China would just stop exporting to America and then they'd be effed.

Gl getting people to work for $1/hr in America, or paying $$$ for a $ product.

Reply 3

Nextmove

Original post by 0906079

China would just stop exporting to America and then they'd be effed.

Gl getting people to work for $1/hr in America, or paying $$$ for a $ product.

Why would they stop exporting to America? that would be pointless for China.

Reply 4

0906079

Original post by Nextmove

Why would they stop exporting to America? that would be pointless for China.

Because if America point blank refuse to pay back the loan I doubt China will just want to carry on as usual and not take some form of action. China export to the whole world anyway and if they pull America out it would hardly affect them much, even though America is a massive country.

Reply 5

Chazzer66

5

China needs US more than the other way round - any LEDC can make ipods given a factory, but only America does capitalism in its most ruthless and profitable manner.
:fatcontroller:

Reply 6

Flying Scotsman

12

Who owes the money to whom? There are some contradictory posts here..

Reply 7

Nextmove

Original post by 0906079

Because if America point blank refuse to pay back the loan I doubt China will just want to carry on as usual and not take some form of action. China export to the whole world anyway and if they pull America out it would hardly affect them much, even though America is a massive country.

Ultimately it'll have to end in war then...

Both countries would be hit but America would be hit much harder, the only thing China could do is stop trading with the USA. That'd increase the price of goods in the US, Aggregate demand would drop, the trust in the US dollar would falter and their economy would pretty much start declining at a rapid pace.

Then China will increase the pressure on the USA to pay back their money even more whilst the USA is unable to do so and probably end up ... ughh... claiming the entire country?

Reply 8

Tony_Soprano1

12

they would stop delivering noodles to the US? oh yeah dont give me that BS about china being a real super power they just havnt got the innovation due to their capitalist ways. And all those people being surpressed/depressed and the millions living within poverty doesnt FOR **** make them someone to be threatened. I dispise the chineese.

Can you really see a chineese guy coming at you with a AK47 HAHAHAHAHA

(edited 12 years ago)

Reply 9

Jampolo

13

Original post by morris743

Obviously the US would be stuffed but would it simply go to war with China then? Nothing to lose and all that... Would the allies of the US also go to war with China or actually switch sides as they know where their bread is buttered? It could also be convienient for certain US allies...

I guess the US would see it as an act of war but would China not be well within their rights to do this? Of course they won't - not only for the implications described, but the fact they are pretty reliant on the US themselves.

How are China reliant on the US? In fact, China and several other countries are trying to rid themselves of their dollar reserves..

Reply 10

CombineHarvester

16

They can't expect the US pay them when they don't have the money. If they wanted it back they'd simply be given shares, stocks, bonds etc. which would equate to the money owed. Probably give them military hardware worth millions or even billions which would reduce the debt. That wouldn't happen though, at worst they'd ask the US to pay back the loan at maximum capacity, if that happened relations would be strained.

Reply 11

tigermoth99

13

It'll be like Homefront, lol

Reply 12

vin

15

this was covered in an ep of the simpsons in the future :hmmmm:

lisa is president and bart gets them more time by asking china "what happened to you man you used to be cool" so they gave the US more time :yes:

Reply 13

Nick Longjohnson

16

Do you honestly think the US has any intention of paying it's debts?

They can hardly pay the interest, let alone capital.

Reply 14

Aj12

18

Original post by 0906079

China would just stop exporting to America and then they'd be effed.

Gl getting people to work for $1/hr in America, or paying $$$ for a $ product.

As would China. Losing their biggest market

Reply 15

ilovedubstep

9

Original post by Aj12

As would China. Losing their biggest market

China's domestic market is rapidly growing. And I think there is some confusion in this thread. The Chinese government does not own American debt. It is Chinese businesses. It is right to say that if the US goes kaput then so will China, but in a few years time this may not be the case.

'If you owe £300,000 the bank owns you. If you owe £300,000,000,000 then you own the bank.'

Reply 16

pol pot noodles

19

Original post by morris743

Obviously the US would be stuffed but would it simply go to war with China then? Nothing to lose and all that... Would the allies of the US also go to war with China or actually switch sides as they know where their bread is buttered? It could also be convienient for certain US allies...

I guess the US would see it as an act of war but would China not be well within their rights to do this? Of course they won't - not only for the implications described, but the fact they are pretty reliant on the US themselves.

They can't just call in loans whenever they like. The Americans aren't stupid, when they sell their debt it's on a repayment schedule. If they want repayment earlier they can ask, and the Americans can refuse. The only thing China can do is stop further buying of US debt, which is sold at auction anyway so it won't really matter much.

Original post by ilovedubstep

China's domestic market is rapidly growing. And I think there is some confusion in this thread. The Chinese government does not own American debt. It is Chinese businesses. It is right to say that if the US goes kaput then so will China, but in a few years time this may not be the case.

That's false, the Chinese government owns approximately $1.1 trillion in US treasury securities. Britain is incidently the third largest holder of US debt with $270 billion. In total national governments own $4.4 trillion, with the rest of the debt being owned privately.

(edited 12 years ago)

Reply 17

ilovedubstep

9

Original post by pol pot noodles

That's false, the Chinese government owns approximately $1.1 trillion in US treasury securities. Britain is incidently the third largest holder of US debt with $270 billion. In total national governments own $4.4 trillion, with the rest of the debt being owned privately.

The total debt is 14 trillion. So that's the majority of it owned privately.

Reply 18

pol pot noodles

19

Original post by ilovedubstep

The total debt is 14 trillion. So that's the majority of it owned privately.

Correct, but the Chinese government does own American debt, which you said it didn't. Most of the private debt is held by Western banks and businesses anyway, not the Chinese.

What would happen if China called on its loan to the US?

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