U.S. Treasury Secretary Addresses China Treasury Concerns Amidst Economic Tensions

U.S. Treasury Secretary Scott Bessent dismissed concerns that China might weaponize its U.S. Treasury holdings. Despite market volatility, Bessent emphasized that the U.S. has tools to address such issues. He argued that selling Treasuries would not benefit China economically, amidst ongoing U.S-China trade tensions involving significant tariffs.

In a recent interview with Yahoo Finance, U.S. Treasury Secretary Scott Bessent sought to assuage fears about China's potential to weaponize its substantial U.S. Treasury holdings. Despite recent fluctuations in the bond market, Bessent emphasized that no substantial risk exists of China using its Treasury assets as a tool for economic leverage against the United States.

Bessent noted that if China were to sell its U.S. bonds, it would have to purchase RMBs, inadvertently strengthening its own currency—an economic move not in Beijing's best interests. These comments come amid heightened trade tensions, where tit-for-tat tariffs have escalated between the two economic powerhouses.

The ongoing tariff war saw a 145% increase in duties on Chinese goods by the U.S., leading to reciprocal tariffs of 125% by China. Beijing has criticized President Trump's tariff strategy, labeling it 'a joke,' to which Bessent highlighted the seriousness and magnitude of the situation. Future negotiations, Bessent asserted, would ultimately require the direct involvement of Trump and Xi Jinping.

(With inputs from agencies.)