Diversification from a frying pan to a fire
So China is now tired of US Treasuries and is diversifying to Korean and Japanese Treasuries. I think this is a classic case when the remedy is worse than the disease. There is no argument that US treasuries are very bad, but this does not mean Japanese/Korean treasuries are any better. Especially Japanese treasuries, which look like the ultimate definition of a junk bond, but unlike the real junk bonds, they don't even pay a yield. (OK, technically, they pay a yield, but you need an electronic microscope to see it.) All the more so that Japan's economy is a mess for precisely the same reasons China's will be a mess soon: overreliance on a fictitious trade partner oversees. The last remaining creditworthines of the Japanese government is backed by the very same thing China wants to diversify away from: a stash of US Treasuries. The same inedible soup, only diluted with dog poo.