Going massively OT, probably will have to move this to the economy thread by the mods.A little OT, but if the USA defaults, sure it will be bad for China in the short to medium term, but it will be positively disastrous for the USA and close allies like Japan and the UK for the short, medium and long term.
If the US defaults, the US$ will very likely cease to be the world's reserve currency very quickly as its value will fall through the floor and no-body would want to touch US financial assets for a very long time.
With China having, and accelerating its diversification of US$ assets into euros and physical and intellectual property rights, China's exposure to a US default has been reduced, and such a move by the US might actually benefit China in the long term as such a drastic move would cause the US to loose a vast amount of influence and power, in important institutions like the world bank, IMF, and huge amounts of capital that was previously invested in the US may well wish to re-locate elsewhere.
So China could potentially move in to fill the power vacuum and make political gains it would not expect to achieve in decades otherwise very quickly, and could also find itself much more attractive to foreign capital, technology and know-how as the best talented individuals and companies may well start quitting the US and moving to China much faster then they already are.
But this is already getting off topic, but getting a little back on topic, if the US defaults and its economy collapses as a result, the likes of the F35 will almost certainly be one of the first victims.
While the world would all suffer greatly, eventually countries will recover and would want 5th gen fighters again. With the F35 dead, the F22 finished and the US aerospace industry likely to have suffered a similar decline as the Russians suffered after the collapse of the USSR, China would suddenly become the go-to place to get a top of the line fifth gen if you are in the market.
With so much of the world's alliances and relations dependent on power and wealth, China may well suddenly find itself a lot more new friends if the US lost significant power, wealth and influence quickly, and so many wealthy countries who previously never even considered Chinese systems may suddenly become interested in a J20-lite.
But this is all rather far fetched, as the Americans would know better than anyone how badly they would suffer if they defaulted, so its simply not going to happen as long as "W" doesn't get back in office.
I was kidding of course, and even if the US "defaults", US treasury bonds aren't going to be instantly liquidated. Instead what will likely happen is that it'll take a credit rating hit and have to get its financial cards in order before its credit ratings get restored and it (as well as the rest of the world) recovers from this flirt with disaster. Unless a debt crisis in the US is prolonged, you're not going to see people suddenly abandon the US Dollar as the reserve currency. Not only is there a massive conversion cost that would be near impossible to exercise in the short term, but if the US goes down so does the rest of the world, and it would still be the world's biggest economy. Reasonably the only thing that will happen is an increase in interest rates (which will probably be temporary) that would slow down the global recession.
However, if the doomsday scenario does happen the global investment market panics don't think China is immune just because it's diluting its bond buy with notes from the EU. EU bonds themselves face danger from insolvent constituents like Greece and Spain. That's not even considering a massive drop in exports, which China heavily relies on, and a noose around investment spending, which China uses as its backup growth generator when exports shrink. Of course this is an Armageddon scenario. It's not going to happen (I hope).
Hahah, you guys posted before I could post the doomsday scenario, but I agree. As of right now the US will still be fine.
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