Robin Brooks, senior fellow at the Brookings Institute, says the real figure is even higher – likely around $1 trillion – after accounting for the unknown sums that China holds via custody accounts in Europe.

If China embarked on a mass sale of its US treasuries, the value of the debt would plunge and yields would soar. This would drive up US government borrowing costs and hammer the public finances in a highly destabilising move.

But the scenario is highly unlikely, not least because the pain for China would be huge.

Marcello Estevão, chief economist at the Institute for International Finance (IIF), says: “It would be self-defeating because it would very much hurt China.”

Mark Williams, chief Asia economist at Capital Economics, says: “China dumping treasuries would be the equivalent of lobbing a hand grenade at someone sitting across from you in a room.”

Trump would get hit, but Xi would be burned too.

Economic self-harm

The Chinese state and its banks own around $3 trillion in dollar assets. “That’s roughly the value of UK GDP,” says Williams. “There is no way to offload $3 trillion of assets in a hurry.”

If China started selling, it would trigger a plunge in dollar values, immediately hammering the value of all of its remaining dollar holdings. And China would not have many options for what it could do with the proceeds of what it did sell, says Williams.

“If it brings them back to China, the renminbi appreciates,” says Williams. This would make China’s exports far more expensive for the rest of the world, hitting its ability to export.

Moreover, the economic self-harm in China would potentially be for nothing, as the US Federal Reserve would step in to stop the damage in the US before it could really get started.

“In the worst-case scenario that China announces they’re going to sell their treasury holdings, for sure, yields in the market would spike. It would be a huge shock, but the Fed would very quickly come in and basically do a massive QE [quantitative easing] programme and push yields all the way back down,” says Brooks.

“The weapon that China has is basically to tighten US financial conditions and tank the US economy. But given that the Fed can step in, that weapon just isn’t very credible.”