> The continued strength of the USD is just a vote of confidence in the buying power of the USD in the future.
Right, but that buying power comes from buying Chinese goods, so a European likes USD since China accepts it and you can buy stuff from them with it. Nobody buys American so that isn't a factor.
If China stopped accepting USD the demand for the currency would drop like a rock, since it is the main exporter in the world.
And why does China want USD? At the end of the day, demand is demand. One or multiple people want to use USD, and why would people want to use a specific currency? Because they trust it to get them something else they want in the future.
China has yuan, Europe has Euro, why can’t they trade that? Clearly, they don’t want each other’s currency, and the best option for both appears to be USD.
(Assuming the premise is true, I don’t know how eurozone countries pay China).
China isn't a free market, the government does strange things for reasons other than maximizing their own wealth. That completely screws over your analysis, companies go to where there is the most profits but undemocratic governments do not.
It is perfectly possible that China does this to weaken the US production industry making it more dependent on Chinese exports since it lets US buy Chinese goods with printed dollars instead of having to deliver anything in return. Then by suddenly ending this agreement it would devastate the US who is now unable to get those goods while China is left with the whole production pie.
> I don’t know how eurozone countries pay China
Europe exports to US and buy China, they are on average trade neutral since USA buys their stuff and they buy Chinese stuff. USA is the source of money and China is the source of goods.
It isn't like China is buying a lot of American stuff, but China hoarding USD makes everyone want USD at least. I'm not sure why they do it, your guess is as good as mine, but at least the world isn't getting USD to buy American stuff, they do it to buy Chinese stuff.
Right, but that buying power comes from buying Chinese goods, so a European likes USD since China accepts it and you can buy stuff from them with it. Nobody buys American so that isn't a factor.
If China stopped accepting USD the demand for the currency would drop like a rock, since it is the main exporter in the world.