Understanding China, One Blog at a Time

An American in China

Impact of China Owning our Debt

Posted by w_thames_the_d on May 15, 2012

I found an interesting website here. The snippet below comes from this site and explains why it is bad to have China purchasing our debt. The general theme is that in doing so, China continues to undervalue its currency and cause our products to be more expensive.

“No, the real problem with the CCP buying so much of our debt is that theycan’t stop, meaning the traditional incentives to get serious about deficit reduction (the fear creditors will stop lending) doesn’t apply. Instead of firm warnings from Wall Street or the City (London), we have a regime desperate tokeep lending us money in order to maintain their cheap currency and export sectors.
Thus, our day if reckoning will be delayed, but hurt that much harder when it finally comes.”
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