Here's How China's Economic 'Nuclear Option' Would Impact US

China's insatiable appetite for gold, copper, and other commodities has led to a debate over whether Beijing is gathering resources to hedge against the consequences of devaluing its currency.

If Beijing invoked the "nuclear option" and intentionally weakened the yuan (RMB), this would likely draw a fiery response from Washington, but it could also take some pressure off American consumers and impact the 2024 elections.

Weakening a currency relative to others has benefits, such as boosting exports by making them cheaper. This may be tempting to China's leadership amid a manufacturing glut and low consumer confidence.

But there are also notable risks to such a move, including pricier imports, higher inflation, destabilization in the global currency market, and trade wars with nations suddenly flooded with Chinese goods that outcompete domestic industries. This has led economists to dub devaluation a "nuclear option."