How come China has deposited so much money on US treasury bonds which has put it in a bargaining position ?

Question

Why America has allowed it to happen what will happen to our companies with cheap goods flowing to our markets.Anything that can be done about it?What if one fine day they cash all the money.Will the US economy fall down?

Answer 1

This sounds like blaming the lending institution / bank when you get a loan from them, without ever intending to pay them back, at least, not in your lifetime, and then crying when the lending institution puts a lien on your house. Bush and his gang have debted the U.S. out to China for generations to come to pay for their oil plundering war. A friend of mine recently, a college professor, said MBA students are scrambling to learn Mandarin, the anticipated new language of commerce by 2012.

Answer 2

The United States borrows $1 billion per day from China because they will loan it to us. This administration promised tax cuts but didn't fund it with spending cuts. The government is the largest since FDR and that excludes the "war on terror," employees, and of course we elected to fight an extra war.

It happened because W got elected and the people listened to the giveaway of lower taxes without bothering to ask the rest of the question, where was the money coming from.

Cheap goods help our companies, if they are of adequate quality.

Nothing should be done about it except the impeach Bush.

The US economy will not fall down, but cashing in on the debt at once would be a great way to go to war with the US without firing a shot.

Answer 3

O.K. First of all China is 'buying U.S. debt' in its legal purchase of Treasury Bonds (T-Bonds).

The sale of those trillions of dollars of 'T-bonds' is paying for the war in Afghanistan/Iraq.

Those are 30 years bonds, which means those bonds do not mature until 30 years from purchase.

The private sector and the U.S. government are two different things.

Already Secretary of the Treasury Paulsen has made dozens of diplomatic trips to China to have the Chinese readjust the Yuan, also called Rinimbi.

China is a communist country with a state controlled economy, the state either sets the prices or heavily subsidizes the company with tax money, that is why China has cheap goods. The subsidized company doesn't have to worry about making a profit or competing with other companies, so it can undercut prices.

Also, deals have been made with giants of American corporations, like Bill Gates and Mike Dell, to have laptops and high tech stuff made cheaply in China (convict labor, slave labor, exploited labor, etc.).

Right now the U.S. economy has taken a hit thanks to all the 'sub-prime loans' given out by irresponsible U.S. banks and loan companies, no fault of the Chinese there.

Answer 4

problem was, US didn't expect China was smart. China was smart enough to identify their target being USA, so they gobbled up a huge chunk of the bonds USA was offering. no way will USA not honor a sovereign liability, unless they wanna face humility all over the world.

that's one reason why USA was pressuring china to devalue the Yuan, so USA can manipulate their currency before. But i guess it would be difficult to that now given the huge forex reserve of china.

Answer 5

Yes it will. I think we have given them more money than we actually have right now. Our economy will probably fall down.

So, anyone want to pack for Canada?

Answer 6

You gotta admit, China's making a lousy investment on this one.