Many foreign countries are dumping US Treasuries, esp. China.
want them to buy them. If they do not, we would expect higher interest
rate. Higher interest rate means depression in housing market and that
would spread to many sectors. It also means the possible switching of
dividend stocks to other stocks. The Fed most likely is keeping interest
rate to 1% or less hike this year. So nothing is really happening now.
China bought our Treasuries and became #1 (demoted to #2 now) to keep
our economy going so our consumers can buy their products.
do not want to kill the goose that lays the golden eggs. However, the
goose is getting older with fewer meat and it could be the time to kill
it before all meats are gone.
With about 3 trillion reserve, China is placing their money in One Belt, One Road infrastructure projects starting with neighboring countries via AIIB. It will benefit them and China in the very long term. When these countries are richer, they will buy Chinese consumer products and China can outsource some manufacturing to the low-wage countries. Investing is always better than consuming.