China threatens 'nuclear option' of dollar sales

By Ambrose Evans-Pritchard
Last Updated: 9:54am BST 08/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.
• Blog - Dollar to collapse?


Fistful of dollars - China's trade surplus reached $26.9bn in June
Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

1) What effect would this have on the Stock Market?

2) What effect would this have on the Housing Market?

3) What is a good investment to be in if this should happen?

China has a problem: too many dollars, and not enough raw materials resources to support their growth. But if they start dumping dollars, the value of the dollar will go down, especially if they do it openly. This could cause a panic among all dollar holders, and the value of everyone's dollars would go down.

Right now, China is investing their dollar reserves in US treasuries. But they are chasing higher yields.

Have you thought about buying Chinese mutual funds and their stock? The housing price in China has been growing, but I don't know if u can legally invest them in China. Where are you now?
What is your nationality?

Overall, it will be very harm to US market, both stock and real estate.