The Department of the Treasury today updated its figures on foreign holders of Treasury bonds. The update appears to show that Chinese holdings of Treasuries fell slightly last year. This is nonsense. The PRC accumulated $471 billion in surplus foreign exchange in 2010. Under Beijing’s own balance-of-payment rules, that money cannot be spent at home. This is not a matter of debate—it physically cannot be spent at home under current conditions. So where is it? It is apparently not in new purchases of U.S. agency debt issued by Fannie Mae …
China’s reported holdings of U.S. Treasury bonds fell sharply again in June and are now almost $100 billion lower than they were in July 2009. The press reports this as meaningful and important. It isn’t. You may have noticed that American interest rates are not soaring; in fact, they’re at historic lows. One reason they’re not soaring is because, contrary to widespread assertions, American interest rates don’t depend on the PRC. The other reason is, over the same period, reported British holdings of U.S. Treasuries rose $265 billion. Why would …
Growing Chinese investment around the world is a major international economic development. In the U.S., the story is how limited Chinese investment is beyond government bonds. Limitations on Chinese investment in the U.S. are not imposed by the PRC. Other than bonds, the PRC invests primarily in natural resources, and the U.S. has such resources. The U.S. is the largest natural gas producer, may top the world in coal reserves, and even has high-cost oil reserves China has shown interest in elsewhere. The U.S. also has various metal ore deposits …
China’s People’s Liberation Army (PLA) this month has been trying to threaten the U.S. economically. However, their plan could actually harm China, not America. Many, many Chinese see reunification with Taiwan as a deep emotional issue. But much of the PLA sees it as a way to pad the military budget. Any attention to Taiwan has Chinese generals demanding some sort of strong action or another, while naturally observing that the controversy justifies more money for them. This happened again with the recent announcement by the Obama Administration that it will provide limited arms to Taiwan. The …
President Obama didn’t accomplish much on his Asia trip. He has the media covering for him, though. They’re not praising him, they’re making bigger errors than he did, especially on the U.S. and China. Tough times have made people pessimistic about America’s future, and with good reason. Elements of the media have picked that up and run (and run and run), to the point of claiming the U.S. is economically subservient to the PRC. This is not just wrong, it’s outrageously wrong. Not to pick on CNN (OK, maybe a …
The Financial Times makes a valiant effort to curb wild talk about China dumping U.S. Treasury bonds. Luo Ping of the China Bank Regulatory Commission may use strong language – “we hate you guys” — but he has a better grip on the PRC’s options than much of the American press or, for that matter, Chinese Premier Wen Jiabao. Luo makes explicit that the size of China’s trade surplus with the U.S. and the balance of payments system Beijing has staunchly defended leave it no choice but to buy treasuries. …
