Jan 23, 2019

China won't retaliate against U.S. by cutting Treasury bonds

Chinese and American leaders at the G20 in Buenos Aires last year. Photo: Saul Loeb/AFP/Getty Images

While some had suggested China could cut its purchases of U.S. Treasury bonds as a way to retaliate or escalate its trade war with the U.S., Fang Xinghai, the vice chairman of the China Securities Regulatory Commission, said such a move is unlikely.

Reality check: It was always a low probability event, as it would endanger China's economy as much or more than the U.S.

What they're saying: Fang told a World Economic Forum panel in Davos, Switzerland, that he doesn’t think his country "will in any way significantly reduce its investment into the U.S. government bond market."

  • China is America’s largest foreign creditor, holding more than $1.1 trillion of Treasuries.
  • Market participants have told Axios in recent weeks that strong U.S. Treasury note auctions could be due to China making a sizable return to the market, as direct bidders — a group made up of foreign buyers and U.S. institutions that don't do business directly with the Federal Reserve — have taken home particularly large slices of recent bond deals.

Worth noting: We don't know for certain whether the Chinese have been buying more Treasuries. The CFTC, which tracks international Treasury buying, has been closed due to the government shutdown, with the last report in December showing October's data.

Go deeper: The market rally that could signal a coming recession

Go deeper

There are warning signs that Nevada could be Iowa all over again

Former Sen. Harry Reid (D) lines up to cast an early vote for the upcoming Nevada Democratic presidential caucus. Photo: Ethan Miller/Getty Images

The alarms are increasingly sounding over Nevada's Democratic caucus, which is just five days away.

Why it matters: Similar issues to the ones that plagued Iowa's caucus seem to be rearing their ugly heads, the WashPost reports.

China tries to contain coronavirus, as Apple warns of earnings impact

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's NHC; Note: China refers to mainland China and the Diamond Princess is the cruise ship offshore Yokohama, Japan. Map: Danielle Alberti/Axios

As China pushes to contain the spread of the novel coronavirus — placing around 780 million people under travel restrictions, per CNN — the economic repercussions continue to be felt globally as companies like Apple warn of the impact from the lack of manufacturing and consumer demand in China.

The big picture: COVID-19 has now killed at least 1,775 people and infected more than 70,000 others, mostly in mainland China. There are some signs that new cases are growing at a slower rate now, although the World Health Organization said Monday it's "too early to tell" if this will continue.

Go deeperArrowUpdated 4 hours ago - Health

Apple will miss quarterly earnings estimates due to coronavirus

Apple CEO Tim Cook

Apple issued a rare earnings warning on Monday, saying it would not meet quarterly revenue expectations due to the impact of the coronavirus, which will limit iPhone production and limit product demand in China.

Why it matters: Lots of companies rely on China for production, but unlike most U.S. tech companies, Apple also gets a significant chunk of its revenue from sales in China.