China has increased its holdings of US debt for four consecutive months, exceeding 9 billion US dollars, ranking first in the world. What impact does this have on China? What does it mean to increase its holdings of national debt and China's inflation? increasing holdings of U.S. treasury bonds means using the foreign exchange reserves of the central bank to buy bonds issued by the U.S. government. To put it bluntly, the United States owes us $9 billion, and of course, it will give us interest. The increase in holdings of national debt is generally due to strategic needs. If you have to ask about the connection with China's inflation, then from the source: our country is a country with capital account control, and foreign currency cannot be directly circulated in China. Foreign exchange earned through foreign trade must be converted into RMB at the bank. These foreign currencies will eventually reach the hands of the central bank, which will issue base currency to exchange these foreign currencies. The base currency is printed by the central bank with a printing machine. The money will be released through loans to commercial banks, which will produce a money multiplier effect, that is to say, more money will flow into the market. If the foreign exchange is very large, the RMB will be overspent, and if there is more money in the market, prices will naturally rise. If there is more money but less things, inflation will occur. Inflation here mainly refers to imported inflation, which is caused by foreign exchange.

In recent years, our country has been a country with a trade surplus. Naturally, there are more and more foreign exchange (mainly US dollars, but also a small amount of euros and yen, etc.). So much foreign exchange can't be left in the central bank to wait for depreciation. What should I do? Buying U.S. Treasury bonds, at least there is still some yield, which is better than leaving it there moldy. Our country has more than 2 trillion foreign exchange reserves, nearly half of which are used to buy foreign debts, and the other half are mainly used for the external payment and foreign investment needs of export enterprises.

I hope my explanation will help you.