Understanding China, One Blog at a Time

An American in China

Why the Communists in China Cannot Ditch Our Debt

Posted by w_thames_the_d on October 15, 2013


The communists in China hold a lot of our debt, too much in fact. Te problem is that they cannot dump it for doing so would make the value of the rest of the US debt they hold decrease in value. This is one reason they cannot dump it. In addition, they buy it because there is little else to invest in. What else will they buy, $11million bronze puffer fish or terror trains? The diks in Beijing are stuck with our debt and there is nothing they can do about it.

Excerpt

Related: US debt stand-off provokes ire among China’s officials – FT.com In the short term, Mr Yu and other top Chinese academics say Beijing’s hands are tied. With $1.3tn invested in US Treasuries, any sudden move to sell those holdings would by itself shake global markets and undermine the value of China’s remaining US assets – the very outcomes that the country’s currency reserve managers want to avoid. “Just thinking about the size of the portfolio, it’s very hard to do,” says Zhu Ning, deputy director of the Shanghai Advanced Institute of Finance. “They want to do it slowly, to not stir up the frontrunners in the market.
From sinocism.com

2 Responses to “Why the Communists in China Cannot Ditch Our Debt”

  1. intermezzo said

    the article is not free. use this link instead:

    http://www.ft.com/intl/cms/s/0/bb3c5d88-3242-11e3-91d2-00144feab7de.html#axzz2hlkEvI3O

    read this one too:

    http://www.forbes.com/sites/gordonchang/2012/01/29/why-are-the-chinese-buying-record-quantities-of-gold/

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