Tuesday, September 18, 2012

Beijing Hints at Bond Attack on Japanese

A senior advisor to the Chinese government, Jin Baisong from the Chinese Academy of International Trade, has called for an attack on the Japanese bond market to precipitate a funding crisis and bring the country to its knees, unless Tokyo reverses its decision to nationalise the disputed Senkaku/Diaoyu islands in the East China Sea, reports Ambrose Evans-Pritchard.

China is Japan’s biggest creditor with $230bn of bonds. If China acted by selling its Japanese bond holdings, it would result in major damage to Japanese government funding capabilities, with ripples around the world.

Keep in mind that China holds enough US Treasury securities that they could deliver the same type of threat at some future point against the U.S. government.


  1. Pull both triggers China!

  2. The final sentence captures my thoughts. I think this warning to Japan, serious as it may be, is also a warning toward the United States more than Japan.

    Perhaps the start of a new form and strategy of warfare. Though if hostilities broke out I can see Japan discharging any debt held by the Chinese causing the Yen to actually strengthen. China wouldn't be able to sell them and would take the total loss on the bonds held.

  3. As a follow up to my above comment, this sort of 'attack' would only be viable in a non-shooting war. As unliked as China is, I cannot see much support for attacking with bombs and guns another nation because they happened to sell your own debt instruments.