Dumping the treasury bonds is the second Chinese economic lever John Kiriakou named in his February 2026 assessment of what an American attack on Iran would cost, alongside the rare earth calculation.
The holding
“You made a second point that I think bears repeating,” Kiriakou told his interviewer. “The Chinese are, depending on what numbers you’re looking at, the second or third largest holder of long term government treasury bonds.”[1]
He has given the ranking more precisely elsewhere. Japan is the largest holder; second is either the United Kingdom or the Netherlands; China is third, on a holding he puts at “700 billion or close to a close to a trillion dollars.”[2]
The lever
The mechanism requires no restriction, licence or announcement — only a sale. “If the Chinese really want to put the pain to us, they can just dump those bonds and our entire economy would crash.”[1]
Why it has not been used
Kiriakou does not present the lever as one China is likely to pull, because the damage runs both ways. The holding makes the two economies mutual hostages: “we would crash each other’s economies if we allowed that balance to tip. So we’ve got a vested interest in keeping the peace with the Chinese.”[3]
That interdependence is also his standing answer to talk of Chinese economic conquest. He says he gets a chuckle out of the announcements that the Chinese are going to do this or invest in that — “they’re already the third largest holder of Treasury bonds. So our um our economies are intertwined, right? We have to work together.”[4]
He turns the same point against the defence budget. If the two economies cannot afford to break each other, he asks, “why do we need to spend a trillion dollars a year on defense? Why? Where does it go?” — and answers that the Pentagon cannot account for it, noting that PricewaterhouseCoopers was brought in to conduct an external audit and gave up after three years, unable to find where the money went.[3]
The question attached
Kiriakou used the two levers together as a cost estimate rather than a prediction, and turned them into a question about the war itself: “So, you know, is it really worth it? Do we really want to do this? Besides the fact that you’re probably not going to get your Nobel Peace Prize for waging a war of choice.”[1]
He accepted the framing that these are costs to America and not to Benjamin Netanyahu, who “doesn’t care if he throws America under the bus” so long as Israel gets chaos in the Middle East — adding only the observation that saying so publicly gets a person called an anti-Semite, as had happened to him weeks earlier. “The word is lost all meaning now.”[5][6]