February 10, 2010We now have disturbing reports that Chinese military officers are urging the Chinese government to use its economic power and sell US bonds to blackmail the American government into banning arms sales to Taiwan.
Reported by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency and picked up by Reporters, we learn that Luo Yuan, a researcher at the Academy of Military Sciences says the Chinese need to do whatever it takes to punish the United States.
"For example, we could sanction them using economic means, such as dumping some U.S. government bonds," Luo said.
Of course, it's not just the US arms sales which are at issue here. There have been tensions over issues like Barack Obama's planned meeting with the Dalai Lama, Internet controls and hacking as captured over the controversy with Google in China and trade and currency disputes.
In other words, there is a raft of reasons why China might sell US bonds.
Now, the Chinese military is in no position to influence Chinese policy in this area but the alarming part is that this suggestion has been put out there by the Chinese government's official press agency.
All this demonstrates the precarious position the US government finds itself in now. The US keeps borrowing and the Chinese keep buying debt and, as the New York Times reports, China is now the largest holder of US Treasury securities at $790 billion.
Economic historian Niall Ferguson has warned that China could use that to exert some political muscle over the US. As he told Vanity Fair early last year: "Now, politically, it might be quite tempting for the Chinese to phone up and say, 'We really disagree with you about, let's say, Taiwan and Japan and North Korea. You'd better listen to us, because otherwise, People's Bank of China starts selling ten-year treasuries, and then you guys are dead'. "
It hasn't started yet but the latest reports suggest we might be entering uncharted waters that could transform the global political landscape. All because the US is addicted to debt.
http://www.soxfirst.com/50226711/chinaus_debt_power_play.php
Reported by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency and picked up by Reporters, we learn that Luo Yuan, a researcher at the Academy of Military Sciences says the Chinese need to do whatever it takes to punish the United States.
"For example, we could sanction them using economic means, such as dumping some U.S. government bonds," Luo said.
Of course, it's not just the US arms sales which are at issue here. There have been tensions over issues like Barack Obama's planned meeting with the Dalai Lama, Internet controls and hacking as captured over the controversy with Google in China and trade and currency disputes.
In other words, there is a raft of reasons why China might sell US bonds.
Now, the Chinese military is in no position to influence Chinese policy in this area but the alarming part is that this suggestion has been put out there by the Chinese government's official press agency.All this demonstrates the precarious position the US government finds itself in now. The US keeps borrowing and the Chinese keep buying debt and, as the New York Times reports, China is now the largest holder of US Treasury securities at $790 billion.
Economic historian Niall Ferguson has warned that China could use that to exert some political muscle over the US. As he told Vanity Fair early last year: "Now, politically, it might be quite tempting for the Chinese to phone up and say, 'We really disagree with you about, let's say, Taiwan and Japan and North Korea. You'd better listen to us, because otherwise, People's Bank of China starts selling ten-year treasuries, and then you guys are dead'. "
It hasn't started yet but the latest reports suggest we might be entering uncharted waters that could transform the global political landscape. All because the US is addicted to debt.
http://www.soxfirst.com/50226711/chinaus_debt_power_play.php
