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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (261008)	4/8/2008 5:51:32 PM
From: TimF	Read Replies (2) \| Respond to of 281500

Who would be hurt more? Hard to say for sure. I suppose it might be China. If China doesn't trade with the US, it loses its biggest market, and it puts a lot of its people out of work. In a country that has come to take rapid economic growth as a given, the shock of an actual decline could cause unrest and instability. If that happens either China's government suppresses it violently, or just perhaps China's government falls apart. As for the US being supplied with what we get from China, Alternatives (some in the US, likely most of them in other countries) would take over the business. There would be disruption at first, and than later the prices might be a bit higher (more than a bit in dollar terms if China also dumps its dollars), but the US would probably make it through the situation better than China would. The USD crash you where talking about would not happen after China dumped its dollars, but while it was dumping its dollars, so even that part, without the "boycotts supplying USA" would be harmful to China. That's closely related to the debt weapon that I was talking about. Either dumping T-bills or dumping all of its dollar reserves would be a "two way weapon", harming the wielder while it harms its target. Combine that with what amounts to trade sanctions against the US and you just compound the harm.