Good point, but you have to remember that it was only a generation or two ago when widespread famine in China was a reality. I grew up with the refrain that if I didn’t finish what was on my plate there were kids in China that would be happy to have it and I’m quite sure that was true. Those sorts of memories don’t dissipate readily. How many people here had parents that grew up in the great depression and remember hearing their stories. But none of them died of starvation. That can’t be said of China.
What goes in the blank is that the next time treasury sells a round of bounds the Chinese refuse to buy any. Depending on non-Chinese demand that could be a huge economy buster or nothing at all. Most likely nothing at all, but someone who actually knows what non-Chinese demand for treasury bonds would be needed for an informed opinion.
I’m not sure but I think recent auctions have had between a quarter and a third of the bonds bought by indirect bidders. These are generally considered to be foreign banks and investors like the Chinese. Of course it certainly includes more than just the Chinese.
So if they dropped out completely it’s likely you would see some drop in demand for US paper. Whether that would be enough to cause a significant increase in rates though is hard to say.
[QUOTE=Amblydoper]
How does one “Fly dramatically?”
[/QUOTE]
Set precedent involves blasting the Ride of the Valkyries, I believe.
And dramatic looks with leather jackets and sunglasses.
Don’t forget the poo flinging monkeys …
Oh, the nerve of the Chinese :rolleyes:
China’s portion of American debt is not out of whack with the size of their economy, about equal to what Japan holds. It’s just something the party out of power likes to smack in the face of the party in power. China should, as a matter of good economic policy, reduce their exposure to U.S. debt, it’s much more a risk to them as unreported inflation keeps nibbling at the greenback dollar. China’s a mess, it’ll be interesting to see how irrational the leadership becomes as all order and progress disappear in a cloud of coal smoke.
On the plus side though, it gives them a huge current account surplus that they can use to buy US assets. That helps with our balance of trade and in turn helps to support our currency since they have to use dollars or dollar equivalents to make those purchases.
The problem is that a lot of our laws, created in the 80’s when we were afraid that we’d become a subsidiary of Japan are still in place are creating a drag on things like Chinese ownership of real property and corporations. At least that’s my cursory understanding. I know it’s quite a bit more involved than that, but the bottom line is that while there is a lot of Chinese investment in the US, there could be a lot more.
If you think this is false, then you are grossly ignorant and need to either educate yourself on the topic or step out of it.
They own a whopping 8% of our debt.
Here’s a heat map that shows how much of the $16.8 trillion in total stated debt is owed to whom. Note that the federal reserve owns about $2.1T or 12.5%. If you look just at the long term debt though, which I think includes only 10-30yr, that figure is closer to 30% but I’d have to check.
Link is broken so let’s try that again - Who We Owe $17 Trillion of Federal Debt to
Damn, that link is painful. It keeps locking up Chrome. I don’t recommend it.
Bottom line, they hold $1.3 trillion of our $17 trillion debt. And NO, there is no point at which they could just demand we pay it.
Also, our economies are way too intertwined at this point. If they acted to crash the American economy, it would be economic suicide, as we would stop being able to import all that crap from them. It would also be a starter whistle for American corporations to bail the fuck out of China and move their production to somewhere less hostile, which would hurt them more in the long term.
It’s funny that you say that since manufacturing is already undergoing a Renaissance in the US.
I think a big reason for that is the glut of oil and especially nat gas. That reduces energy costs as the article explains plus ethylene from nat gas is a raw input to a lot industrial processes so companies are starting to move operations back here despite higher labor costs.
A few points:
- The islands have been claimed by Japan since 1895, well before World War II.
- The islands are close to Japan. They’re about equidistant between the Yaeyama Islands (part of Okinawa Prefecture) and Taiwan.
- No doubt the Chinese could have gotten the islands following the war if they’d actually wanted them. But it wasn’t until a couple decades later (after potential oil/gas deposits were found) that they remembered the islands existed.
Besides what others have said already, the fact is any American President except maybe Ron Paul or Dennis Kucinich would have done the same considering our treaty obligations with Japan.
<Are you saying the islands should have been given to China as spoils?>
Absolutely.
Anyway, before the war, Japan controlled large parts of China, Manchuria and Korea. Are you saying they should have been given back to Japan after the war?
Japan got it’s butt kicked, as it so richly deserved, and should have lost the islands, and Okinawa as well.
<as we would stop being able to import all that crap from them.>
Good idea. Then you might be able to get some jobs in the US. Win for the US.
Nixon has a lot to answer for.
So why don’t you pay it off? Perhaps it’s because the US is broke!
Except that Okinawa actually wanted to remain part of Japan and the Chinese never claimed the Senkaku until the gas and oil reserves were found (and hasn’t ever claimed Okinawa to my knowledge). Do you also support kicking out all the ethnic Germans east of the Oder-Neisse Line and in places like the Sudetenland after World War II?
Also would you be saying the same thing if Mitt Romney had been elected President last November and was pursuing the exact same response to Chinese aggression? Or rather would you be beating the war drums, denouncing the Red Chinese menace?