I understand what you are saying here but I dont think China sees it that way. China can reduce bond buying gradually and the US will not stop buying Chinese products nor will the rest of the world for that matter. Australia small as it is will not stop selling our IO or coal to china because China may stop buying US bonds, of that I am certain. Australia will also not stop buying Chinese products either much to my dismay.
There you have it the world cannot stop buying Chinese goods, the alternative is too expensive, but the world will stop buying US made goods as they are prohibitively expensive in Australia.
There is another problem there are a great number of US companies producing their goods in China. Even after Trumps big tax cuts these companies will not go back to the US. Most of the car manufacturers are now in China although they keep a token industry going in the US and Australia such as the much acclaimed designing centre for GMH I think it is.
Make no mistake I think China is in the box seat here and the US has initiated so many trade wars against China in recent history I think they have a mind to do it.
]In any event if China stops buying bonds and holds on to what they already have which is about 2.5 trillion in USD that will be the same as selling them if they hold them till maturity because the US must pay.
Even if China stops for 6 months it may spell a disaster in the US debt bond market and that may well spread.
