Available data don’t give a definitive answer to whether sales by Chinese institutions contributed to the recent volatility in the US bond market. But China’s state managers of foreign assets still appear to have more than half of their portfolios invested in US markets, despite the geopolitical pressures of recent years. That is because they don’t have attractive alternatives outside China, and certainly not at home. A fire sale of these assets would impoverish China more than it would hurt the US.
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