It is also true that China holds a significant portion of US T-Bonds. Perhaps that gives China some leverage?
Leverage to achieve what? Favorable US policies, maybe.. But it won't do them any good if the US goes into recession.
Essentially, they hold US T-Bills because, with the reduced value of the dollar, they have to represent a pretty good value. And of course, how would they repatriate those dollars without having to open up their Yuan to global FOREX markets? They would have to sell USD to buy Yuan, wouldn't they?
And guess what? Should we ever, god forbid, find ourselves at war with China, we'll simply seize all of their T-Bills as spoils of war.
Thus, IMO, having China hold a large quantity of US denominated debt is to OUR advantage, not theirs.
Of course, it is awkward when it comes to waging a war of treaties and regional influence.
Hawk |
