China plans to displace the U.S. as investors’ top target, and global crises have sped up its effort.
China is no longer biding its time and hiding its strength. Those days are over.
China’s economic growth in 2020 significantly outpaced the U.S. and all other major economies, which suffered severe recessions. China’s recent adventurism at home and abroad can be explained largely in economic terms. Its leaders draw confidence to challenge the world from their country’s macroeconomic outperformance, and from their growing belief in the superiority of China’s economic governance model.
A new front in the great power competition between the U.S. and China has opened. Beijing isn’t yet ready to challenge the U.S. dollar directly. But it has set its sights on the U.S. bond market, which showed new vulnerability last year. China is taking steps to displace U.S. Treasurys as the world’s most important and reliable asset. American policy makers should take notice.