The scale of U.S. national debt has surpassed $35.2 trillion, triggering concerns in the global financial market. Renowned entrepreneur Elon Musk has warned that the United States is accelerating towards bankruptcy. As the second-largest foreign creditor of the U.S., China holds $780.2 billion in U.S. debt, facing potential risks.

At the same time, whether the over 600 tons of gold that our country has stored at the Federal Reserve can be safely retrieved has become a hot topic of discussion. Against the backdrop of the intensifying U.S. debt crisis, how China responds to these challenges and protects its own interests has become a key issue in the current international financial landscape.

The grim reality of the U.S. debt crisis

The scale of U.S. national debt has broken through $35.2 trillion, a staggering figure. This is equivalent to each American carrying a debt of more than $100,000, which can be described as a "national-level" debt crisis.

What is even more worrying is that U.S. national debt continues to grow at an alarming rate, increasing by about $1 trillion every hundred days. This frantic borrowing behavior inevitably reminds one of a balloon that keeps expanding and will eventually face the risk of bursting.

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The U.S. government needs to pay nearly $1 trillion in interest annually, and this figure is expected to soar to $1.7 trillion by 2034. This enormous interest expenditure will undoubtedly further exacerbate the financial pressure on the United States. In the meantime, the U.S. government's fiscal deficit remains high, with the fiscal year 2024 expected to reach $1.9 trillion, and the cumulative deficit over the next decade could exceed $22 trillion. This series of numbers paints a worrisome picture of the U.S. fiscal situation.

Faced with such a severe debt situation, the U.S. government frequently adjusts the debt ceiling, having done so 103 times since World War II. However, this "self-deceptive" approach not only fails to solve the fundamental problems but may also accelerate the collapse of the U.S. credit system.

We cannot help but ask: Can the United States extricate itself from the debt quagmire it has created? How will this crisis affect the global economic landscape, especially China's interests?

Why has the United States fallen into such a severe debt crisis? What has led the world's largest economy to the brink of bankruptcy?The answers to these questions are not straightforward. Is it due to the long-term excessive spending by the U.S. government? Or is it a significant error in the monetary policy of the Federal Reserve? Or is it the inevitable result of the decline of American financial hegemony?

More critically, as the second-largest creditor of the United States, what risks will China face with its $780.2 billion in U.S. Treasury bonds? Can the more than 600 tons of gold that our country has stored at the Federal Reserve be safely retrieved? Against the backdrop of the intensifying U.S. debt crisis, how should China protect its own interests and maintain national financial security?

These issues are not only about the economic destiny of China and the United States but will also profoundly affect the future direction of the global financial landscape. Let's delve deeper to uncover the truth behind this crisis.

The U.S. debt crisis is not a sudden event but the result of long-term accumulation. Since the financial crisis in 2008, the U.S. government has adopted large-scale quantitative easing policies to stimulate the economy, leading to a rapid expansion of the national debt. In 2013, the U.S. national debt first exceeded $16 trillion. Over the next decade, this figure almost doubled, surpassing $31 trillion in 2023.

As of September 2024, the U.S. national debt has exceeded $35.2 trillion, accounting for about 130% of its GDP.

This ratio far exceeds most developed countries and is even higher than some developing countries in debt crisis. To maintain such a huge debt scale, the U.S. government has had to frequently adjust the debt ceiling. Since 1960, the United States has adjusted the debt ceiling 103 times, with an average of 1.6 adjustments per year.

At the same time, as the second-largest overseas creditor of the United States, the scale of U.S. Treasury bonds held by China is also constantly changing. In 2013, China's holdings of U.S. Treasury bonds reached a peak of $1.3 trillion. Since then, China has gradually reduced its holdings of U.S. Treasury bonds, and by June 2024, the scale has been reduced to $780.2 billion. This trend of reduction reflects China's concerns about the risks of U.S. debt.

However, China still faces a huge risk exposure. In addition to the U.S. Treasury bonds it holds, China also has at least 600 tons of gold stored at the Federal Reserve. The safety and retrievability of these assets have become a common focus of concern for China's decision-makers and the general public against the backdrop of the intensifying U.S. debt crisis.

Faced with the increasingly severe debt problems of the United States, the international community has different voices. Some argue that the United States, with its global financial hegemonic status, can deal with the debt crisis by continuously printing money, and there will be no substantial default in the short term. However, some experts warn that the continuous expansion of U.S. debt will eventually lead to the collapse of the U.S. dollar's credit, triggering global financial turmoil.

For China, how to deal with the risks of U.S. debt is also controversial. Some people advocate accelerating the reduction of U.S. Treasury bonds and increasing holdings of hard assets such as gold. Other views suggest that caution should be exercised to avoid triggering market panic.So, what is the essence of the U.S. debt crisis? What impact will it have on the global economy, particularly the Chinese economy? And how should China protect its own interests in this potential financial storm? Let's delve further into these issues.

The root of the U.S. debt crisis can be traced back to its long-standing economic policies and the global financial system. First, the U.S. government has long relied on deficit spending to maintain economic growth and social welfare, leading to a continuous rise in the national debt. Second, the Federal Reserve's low-interest-rate policy and quantitative easing measures, while stimulating the economy in the short term, have also exacerbated debt expansion.

More critically, the status of the U.S. dollar as the world's primary reserve currency allows the U.S. to meet its debt needs by continually issuing dollars. This "privilege" has trapped the U.S. in a vicious cycle of "debt-financed debt," where the larger the national debt, the more new debt is needed to repay old debt.

For China, the risks brought by the U.S. debt crisis are mainly reflected in the following aspects:

Asset security risk: The $780.2 billion in U.S. debt and over 600 tons of gold held by China are at risk of devaluation or non-recovery.

Foreign exchange reserve risk: The devaluation of the U.S. dollar may lead to a reduction in China's foreign exchange reserves.

Export pressure: A recession in the U.S. economy may reduce the demand for Chinese goods, affecting China's exports.

Global financial stability risk: The U.S. debt crisis may trigger global financial turmoil, indirectly affecting China's economy.

However, this crisis also brings opportunities for China.

It may accelerate the process of de-dollarization and promote the internationalization of the renminbi. At the same time, it also creates conditions for China to participate in global financial governance and enhance its international voice.Future Outlook and Response Strategies

In the face of the US debt crisis, two starkly different scenarios may emerge in the future:

Optimistic Scenario: The United States leverages its economic strength and financial innovation capabilities to successfully manage debt risks and avoid default. The global economy gradually resumes growth, and China and the United States reach a new balance in the financial sector.

Pessimistic Scenario: The US debt crisis spirals out of control, triggering global financial turmoil. The credibility of the US dollar collapses, and the world economy plunges into a deep recession.

Regardless of the scenario, China needs to take proactive measures to respond:

Continue to prudently reduce holdings of US debt while increasing reserves of hard assets such as gold.

Accelerate the internationalization of the renminbi and promote diversification of the international monetary system.

Deepen financial reforms to enhance the resilience of the financial system to risks.

Strengthen financial cooperation with other countries to jointly address potential risks.

Only by preparing in advance can we remain invincible in the face of the possible financial storm that may be on the horizon.Online discussions are buzzing with the topic of the U.S. debt crisis. Some netizens believe: "The U.S. is playing with fire! They think they can solve problems forever by printing money, not realizing that this will only accelerate the collapse of the dollar's hegemony."

Others express concern: "If the U.S. really defaults on its debt, the global economy will be impacted. How should we protect our assets?"

Some netizens analyze from a historical perspective: "The current situation in the U.S. reminds one of the decline of Britain after World War II. When an empire cannot bear the responsibilities that come with its hegemonic status, new forces will inevitably rise."

A few netizens offer suggestions for China's response strategy: "We should accelerate the internationalization of the renminbi, reduce dependence on the dollar. At the same time, we must also enhance the stability of our own financial system."

There are also netizens with a relatively optimistic attitude: "The resilience of the U.S. economy should not be underestimated; they may find innovative ways to deal with the debt issue. But no matter what, this is an opportunity for China's rise."

These comments reflect the public's diverse views on the U.S. debt crisis and also demonstrate people's thoughts on how China should respond to this challenge.

In summary, the U.S. debt crisis is not only an economic issue but also a significant topic concerning the global financial landscape and geopolitical situation. It reflects the deep-seated contradictions in the current international monetary system and suggests that the world economic order may face reconstruction.

For China, this is both a challenge and an opportunity. We need to prudently manage U.S. debt and gold assets while accelerating financial reforms and the internationalization of the renminbi. More importantly, we must actively participate in global financial governance while safeguarding our own interests, contributing Chinese wisdom to the construction of a more equitable and reasonable international economic order.Facing this crisis that could potentially alter the global economic landscape, China needs to maintain strategic composure, being prepared for the worst-case scenario while also possessing the courage and wisdom to seize opportunities.

In conclusion, we cannot help but ask: in this global financial game, can China grasp the opportunities to make the leap from a financial power to a financial powerhouse? This requires not only the wisdom of decision-makers but also the collective efforts and unwavering confidence of the entire nation. Let us wait and see, and witness the turning point in history together.