Lately, I've been pondering an interesting question—if China really sold off all of its $771 billion in U.S. Treasuries, would the U.S. economy collapse immediately? This topic has been trending online, but many people actually have it wrong.

Let's start with the data. Last year, U.S. national debt surpassed $35 trillion, meaning each American owes about $100,000. China, as the second-largest foreign holder of U.S. Treasuries, holds $771 billion within that $35 trillion—only about 2%. It seems small, but in the international financial markets, that 2% can still cause a stir.

If you ask, "Would selling off U.S. Treasuries have serious consequences?" the answer is—short-term, there would indeed be turbulence. The supply of Treasuries would suddenly spike, prices could fall, yields would rise, and the U.S. borrowing costs would go up. The global economy might shudder a bit, other markets could fluctuate, and investors might panic and shift their funds elsewhere. Sounds like the U.S. is doomed, right?

But here’s a key point—selling off U.S. Treasuries by China would actually hurt itself quite a bit too. The risk of the dollar depreciating would immediately surface, and as the world’s largest foreign exchange reserve holder, China holds a huge amount of dollar assets. If the dollar falls, China would also suffer losses. So, from an economic rationality perspective, holding onto U.S. Treasuries is actually more advantageous for China. It’s become a form of economic diplomacy—holding this “trump card” to be played at critical moments.

Recently, I’ve realized that, compared to the radical move of selling off Treasuries, the real threat to the U.S. economy is the global “de-dollarization” wave. That’s a long-term, systemic impact.

Think about how the U.S. has played in recent years. When facing economic difficulties, it just prints more money—quantitative easing and dollar flooding. In the short term, U.S. companies have indeed thrived, but the dollars printed flow in large amounts to other countries, especially those with weaker, more fragile economies in developing countries. Seeing that the dollar is cheap, they borrow and spend through investment and consumption, and end up accumulating a stack of dollar-denominated debt. When the U.S. economy recovers and the Federal Reserve raises rates, international capital quickly pulls out from other countries and flows back to the U.S. With this whole playbook, the lost decade in Latin America, the financial crisis in Southeast Asia, and the recent economic crises in Argentina and Turkey all have America’s shadow behind them.

So now, many countries are starting to feel dissatisfied. Reports indicate that by mid-2024, nearly half of the world's countries will have begun “de-dollarization.” Emerging economies are taking the lead, with China promoting the internationalization of the renminbi, the BRICS countries establishing a new financial clearing system, and even some traditional developed nations starting to follow suit.

Honestly, the consequences of China selling off U.S. Treasuries are less about the direct impact and more about revealing a deeper issue—the decline of dollar hegemony is already unstoppable. Compared to simple selling operations, systemic alternatives like de-dollarization are the real forces that could reshape the global economic landscape.

China’s role in this process is indeed pivotal. As the world’s largest developing country, every step we take could influence the global economic order. Instead of obsessing over “what if China sells Treasuries,” it’s more meaningful to look at what we are actually doing—pushing for de-dollarization, promoting the internationalization of the renminbi, and building new financial systems. That’s the real way to rewrite the future.

Ultimately, holding Treasuries or selling them is just surface-level. The real contest is over who can dominate the next era’s financial order. This game has just begun, and there’s more to come.