The Avoidable War: The Dangers of a Catastrophic Conflict between the US and Xi Jinping's China

by Kevin Rudd

However, the prospects for decoupling US and Chinese capital markets presents a different and more complex picture than we find elsewhere in the US-China economic relationship. The reason is that the current scale, interdependency, and mutual exposure of Chinese and American financial interests are simply too great. As of 2021, the US-China bilateral financial relationship stood at just over $5 trillion. This includes Chinese listings on US stock exchanges ($1.9 trillion), $1.5 trillion in Chinese stocks and bond holdings on Chinese and Hong Kong exchanges intermediated by US firms, $200 billion in Chinese holdings of US corporate stocks and bonds, $100 billion in US cross-border lending to Chinese firms, $1.1 trillion in Chinese official holdings of US Treasuries, and a further $200 billion in other US government bond holdings. The bottom line is that these are very large numbers indeed.