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Back in the beginning of the year Bloomberg reported that “senior government officials in Beijing reviewing the nation’s foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries.”

A fair amount has happened since then, so it’s worth reviewing a few comments from the article, as well as some of the developments that have taken place.

One of the interesting quotes was as follows:

“The officials recommended that the nation closely watch factors such as the outlook for supply of U.S. government debt, along with political developments including trade disputes between the world’s two biggest economies when deciding whether to cut some Treasury holdings.”

So how is that going so far?

If that quote is anywhere near reflective of the decision-making going on inside China (which at least logically enough it should be) then it’s hard to imagine the Chinese central planners are so thrilled by what’s transpired that they can’t sleep at night because they’re just too excited to wake up and bid on more treasuries.

With the U.S. passing a $1.3 trillion spending bill that includes increases for the military, the new long-term debt forecasts now talk about hitting $30 trillion by the year 2028. So to put it kindly, the outlook for the supply of U.S. government debt is not exactly headed in the right direction. Although amazingly that might actually be the good news when compared to how things are going in terms of the political relationship.

After weeks of speculation President Trump did go ahead and implement new tariffs on China, with the stock market dropping 700 points in response. Less than a day later China responded within its own set of tariffs against the U.S., prompting even CNBC’s Jim Cramer to say, “they are so ready for what we do, it’s embarrassing.”

Which perhaps wouldn’t be the biggest deal, except for the fact that China is one of the largest creditors to the U.S. in the form of its holdings of government treasuries. Because it’s one thing to antagonize a country that doesn’t have the means to fight back. But a completely different story to continue to challenge a nation that not only has the ability to strike back economically, but has given every indication that it’s growing increasingly willing to do so.

China has been on a gold buying spree, and has also continued the implementation of its PetroYuan. The nation is also likely abundantly clear that the United States government has no long-term fiscal plan.

So think about it like this. If you were China, would you want to keep buying treasuries? Outside of possibly not wanting to accept that the money already lent can never be repaid, there’s little other reason for them to want to increase the size of the ultimate loss.

Trade wars are never a good thing economically. But that’s even more the case for an economy like the U.S. that’s already in bubble territory and is now facing a rising interest rate environment.

There’s a school of thought being passed around that behind the scenes, Trump is engaged in a war with the Deep State and actively trying to destroy their base of power. If that is indeed the goal, then perhaps this plan will be successful. But at least to the degree that we take this series of events at face value, the actions seem far from an ideal economic strategy.

Because if the Chinese were not excited about buying more U.S. debt in January, they surely can’t be thrilled about doing so now.