Coming Chinese Dollar Debt Default?

With the Ukraine war raging and the West hitting Russia with a wide array of aggressive economic sanctions, it is popular to suggest that in response, Russia's global partner China will eventually promote development of a bifurcated global system with the West on one side and Russia, China, and the like on the other. Such a change in the makeup of the global economy would require the end of the dollar's universal role as the world's reserve currency.

Yet such an outcome would face some serious roadblocks. One of them is China's debt. China has $2.4 trillion in dollar-denominated debt with an average maturity of about four years. That requires an annual debt service payment of about $600 billion. Here's the problem. China's annual current account surplus is only between $300-$400 billion. With the world economy deglobalizing, that surplus is likely to shrink. So a dollar-denominated debt default by China at some point seems probable. Concluded one...