China Threatens to Crash Dollar

By Dustin Lushing,  Newser Staff
Posted Aug 8, 2007 5:04 AM CDT
jing's soaring trade surplus. (AP Photo/Vincent Yu, file)   (Associated Press)
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(Newser) – The Chinese government is threatening to crash the American dollar by liquidating its $1.33 trillion in foreign reserves if the US dares impose trade sanctions to force a revaluation of yuan, reports the Telegraph. Two Communist Party officials have given interviews in recent days with stern warnings directed at the US that China is prepared to engage in an economic "nuclear option."

A top government finance chief also proclaimed that China's vast holdings—which includes $900 billion in a mix of bonds—should be used a "bargaining chip" against the US. The political threats come as Capitol Hill prepares for the autumn session, where they will debate a bill that establishes tariffs against China.