Foreign Policy Digital

China’s Dangerous Dollar Addiction

China pays for raw materials in greenbacks, but Trump’s trade war could soon dwindle its dollar reserves.

The trade war with the United States may soon hit China where it hurts, making it hard for Beijing to satisfy its voracious appetite for natural resources.

Every year, China spends roughly $350 billion just to purchase the copper, coal, iron ore, aluminum, steel, and crude oil it needs to keep the Chinese economy running. And that bill could grow as China eats through even more raw materials to build roads, railways, and ports across Eurasia as part of its Belt and Road Initiative.

The problem is that these commodities are traded in dollars, and the transactions are cleared through the U.S. banking system. To buy them, then, Beijing needs to earn an equal amount of dollars by selling its own goods. Yet Washington, by curbing imports from China—for which

You're reading a preview, sign up to read more.

More from Foreign Policy Digital

Foreign Policy Digital4 min readPolitics
Trump’s Growing European Base
Attitudes toward the United States are improving across the Atlantic—but only because the right wing is getting stronger.
Foreign Policy Digital5 min readPolitics
Europe Is Running Out of Time to Save the Iran Deal
After initiating a dispute resolution process, European leaders have a limited window to provide Iran with meaningful economic relief and seek to reduce tensions between Tehran and Washington.
Foreign Policy Digital2 min readPolitics
Our Top Weekend Reads
Australia’s climate denialist media, a pro-independence mandate in Taiwan, and power-sharing returns to Northern Ireland.