China?
Ahead of the G20, Chinese Premier Wen Jibao says this about US Treasury security,
What's the play here, BRIC leverage at the G20? An attempt to warn the US about too much debt?
(It should be noted that this was deep in a news conference on China's plans and recovery, but they had to know it would gain notice. China is not incautious.)
"We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference following the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."
What's the play here, BRIC leverage at the G20? An attempt to warn the US about too much debt?
(It should be noted that this was deep in a news conference on China's plans and recovery, but they had to know it would gain notice. China is not incautious.)
posted by mikevotes at
7:37 AM
10 Comments:
Saying that China has a "huge amount of loans to the United States" is an understatement. China financed the majority of the Iraq invasion and occupation, which Bush kept "off the books" by accounting sleight-of-hand. With the enormous amount of debt they hold, China could put the dollar in free fall at will. Thus, the price for imports goes up. And since we've off-shored all manufacturing, pretty much everything is imported.
The message that I get from the Premier's statement is that China's open lending to the US is not to be taken for granted. He is also reminding us that there is not a big line of other countries willing to buy the quantities of debt that we have become accustomed to China purchasing.
By
Todd Dugdale , at 8:59 AM
That's true
I would like to add two things. First, although China has the most US debt (especially among the more recently issued stuff) their share is only 10% or so. So, yeah, they have leverage, especially over currently issued and near future debt, but they aren't the giant moster they are often portrayed to be. I remember when the Japanese were going to take over America.
Second, China's pretty much tied to that debt. They definitely have influence through it, but they also can't afford to dick around too much because they've got a trillion dollars tied up in the American currency.
My guess on this statement is that they're trying to influence the G20 discussions more towards BRIC and trying to shape the IMF changes and cash influx that's coming.
I see this as a pawn feint in the game of the next world economy.
By
mikevotes, at 10:37 AM
Why does it have to be a 'play'? They're worried about US Treasuries. He's being honest. Should they just say nothing and keep buying them?
By
Anonymous, at 12:25 PM
It's a play because it's the ultra cautious Chinese. Perhaps coming out of their culture, perhaps because of their much more repressive past, Chinese politicians don't just say things like this.
If they're going to say anything that ruffles anyone's feathers, it's always thought out.
So, predicated on that, I figure there must be some purpose to this.
By
mikevotes, at 12:49 PM
Well they are a major player in the global economy now. I guess that's unprecedented. Basically I see an investor worried about their investment. Perhaps they should have spoken up earlier.
By
Anonymous, at 1:41 PM
Oh, I think they are concerned. But stating those concerns publicly has ramifications.
There's some reason this was dropped publicly. Maybe simply because the private entreaties weren't properly responded to.
By
mikevotes, at 3:36 PM
so, this makes me think of the Amero.
Is the idea that we've got the Northern American Union and a new currency coming down the belt a truth nobody wants to talk about, or conspiracy theory nonsense?
I don't really know enough to hazard a guess.
By
Anonymous, at 4:34 PM
"There's some reason this was dropped publicly. Maybe simply because the private entreaties weren't properly responded to."
Somebody needed to say it. We'd wait a long time for Gordon Brown to say anything.
But you're right....it is unusual behaviour for China. Normally they try to avoid interfering in other countries policies. I guess they are in too deep this time.
I think at the root of it is the two systems....controlled (socialistic) economy versus unregulated (free) markets. It must look to the Chinese as if America just can't give up on the idea of easy credit even if it means printing money.
By
Anonymous, at 5:02 PM
Anon 1,I think that NAFTA as merger thing is (paranoid?) garbage. There's no way the US would involve Mexico in its currency. It's actually pretty unlikely that the US would tie itself to the traditionally weak Canadian dollar.
...
Anon 2, I'm not completely sure that's the play. I just have this feeling, and I can't really explain why, that China may be looking to use this economic mess to dislodge the US a little from its position.
At some point, I'm expecting to see the Chinese start maneuvering a little harder than they are now. This may be my paranoia, and too early in their development, but it feels like they trying to use the BRIC as leverage and to somewhat lever the US against Europe.
Over the coming decades, China needs to broaden itself and global power away from the US.
Then again, maybe this is just immediate concerns. I don't know.
By
mikevotes, at 5:16 PM
There are lots of areas now where the US and China are in competition. Epecially for resources in places like Africa and South America. How far does China want to assert itself? They probably look at all the US military bases around the world and ask the same question.
By
Anonymous, at 7:03 PM
Post a Comment
<< Home