China certainly can issue dollar bills more cheaply than the US and it already does in small size, but scaling that up would concentrate currency, rollover and sanctions risk on Beijing while simultaneously reinforcing the dollar system it ultimately wants to escape. The trade-off is therefore asymmetric: the political sting to Washington would be modest and reversible, whereas the balance-sheet, legal and geopolitical liabilities for China would linger long after the bonds are sold.
> Its Western assumption that China wants to escape the USD reserve currency.
Nah, they have a lot of them, they don't want their value to drop.
What the world wants is to escape (at least in the medium term) is the US oversight that forces the USA's enemies to be everyone else's enemies.
From what I can tell, they are going to use (are using) Hong Kong as a ex-USA location to price and trade USD - modeled on the Eurodollar. With a lot of trade-with-China being settled in their e-CNY CBDC.
As a poster alluded to - the big loss for the USA is the insights into pricing and demand.
