Core Viewpoint - The article discusses the ongoing financial tensions between the U.S. and China, highlighting China's significant sell-off of U.S. Treasury bonds and its increasing gold reserves as a strategic move against the dollar's dominance. Group 1: U.S. Treasury Bonds - The yield on the 10-year U.S. Treasury bond has risen above 4.5%, indicating market distress and raising concerns for the U.S. government [3][6] - In May, 38% of institutional investors reduced their holdings in U.S. stocks, marking the lowest level since May 2023, coinciding with a reduction in U.S. Treasury holdings [3][6] - The Federal Reserve has quietly halted its tightening plans and has begun purchasing excess U.S. Treasury bonds, acquiring $43.6 billion in the past week alone [6][10] Group 2: China's Actions - In March, China sold $18.9 billion in U.S. Treasury bonds, reducing its holdings to $765.4 billion, the lowest level in 15 years [8][10] - China's gold reserves have surged to 2,295 tons, constituting over 6.8% of its foreign exchange reserves, with a significant increase in gold trading volumes [8][11] - China is reportedly engaging in a "renminbi-gold" swap agreement with Brazil and Argentina, linking commodities directly to gold to bypass the dollar [10][13] Group 3: Global Central Bank Trends - The proportion of U.S. Treasury bonds held by global central banks has plummeted from 34% to 24%, while gold reserves have reached a new high since the dollar's decoupling from gold in 1971 [13] - Other countries' central banks have also increased their gold reserves, with 94 tons entering various central bank vaults by March 2023 [8][10] - The article suggests a growing trend of countries moving away from dollar dependency, as evidenced by transactions involving the yuan and gold [13]

Core Viewpoint - The report from Renmin University of China's Chongyang Institute for Financial Studies warns of a significant risk of collapse in the U.S. economy and its debt system, predicting that 2025 may mark the year of a U.S. debt crisis, likening it to a Ponzi scheme nearing bankruptcy [1][4]. Economic and Financial Analysis - The U.S. national debt has reached $36.2 trillion, accounting for 123% of GDP, significantly exceeding the internationally recognized warning line of 60% [4]. - The report highlights that the U.S. government is increasingly reliant on "borrowing to pay off old debts," with approximately $9.3 trillion of public debt maturing in the 2025 fiscal year, representing one-third of total debt [4]. - Interest payments on U.S. debt are projected to reach $882 billion in the 2024 fiscal year, a 33.7% increase year-over-year, surpassing military spending for the first time [4]. - Cumulative interest payments over the next decade could total $13.8 trillion, nearly double the inflation-adjusted total from the past 20 years [4]. Policy Implications - The report criticizes the policies of the Trump administration, particularly the "reciprocal tariffs" and extreme fiscal tightening, which have led to a significant rise in inflation expectations and a drop in consumer confidence [3]. - It suggests that the combination of high tariffs and tax cuts will exacerbate social inequality and push inflation closer to 5%, further destabilizing the economy [4][5]. - The report warns that the U.S. government's loss of credibility under the current administration could lead to a market collapse similar to that of 2008 [3][4]. Global Economic Impact - The report indicates that the U.S. is increasingly viewed as a global adversary due to its aggressive tariff policies, which could lead to a contraction in global trade [5]. - It predicts that the collapse of U.S. debt will not signify the end of the international financial system but rather the beginning of a long process of restructuring the global credit system, with a shift towards a multipolar currency system [5]. Recommendations for China - The report advises China to strengthen its financial defenses against the risks posed by U.S. debt, including establishing a monitoring and early warning system for U.S. debt defaults [6]. - It emphasizes the need for China to enhance its economic resilience, improve domestic consumption, and promote the internationalization of the Renminbi [6].