In almost his first act of foreign policy through the revolving door of 10 Downing Street, Prime Minister Rishi Sunak spoke with President Joe Biden and agreed 'to counter China's malign influence' as Downing Street phrased it. Maybe Rishi has forgotten how UK gilts have been selling off strongly all year, especially among foreigners? Does he want to make the gilts crisis even worse, before he's even announced his own unfunded tax cuts for billionaires?
The Bloomberg chart above (source) shows Chinese bonds outperforming US Treasuries and UK gilts this year. Maybe UK should manage our finances better rather than flip-flop on rash policies and antagonise our creditor?
Telling your creditor that you want to come to his neighbourhood, point rifles at his family, cause tensions with the neighbours, tell him how to run his house, and make him poorer isn't a good way to encourage further credit. He might decide he doesn't want to finance your ships, guns, fiscal deficits, and trade deficits.
The DMO doesn't make its data public, but the US Treasury does publish monthly data on who owns US Treasuries. That's a reasonable proxy for the UK, although demand for UK debt will be much lower because of Brexit alienating EU investors, currency instability in Sterling (GBPUSD down from 1.4 in January to 1.12 now), poor liquidity in size, and record political instability as the Tory party undemocratically selects leader after leader while the world watches in despair.
It is reasonable to expect the Chinese selling of UK gilts will be worse as there is no reason to hold negative yielding and depreciating gilts as a store of value, for liquidity, or for exchange rate stability.
I had hopes that Sunak with a City background would take a more measured approach to UK's foreign affairs and revert to the policy of promoting 'global Britain'. After just one day the new PM has disappointed. I feel sorry for the DMO and Bank of England. More gilts and sterling instability lies ahead.