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Giant trade deficit with U.S.
China is a huge and lucrative market for American goods and services, and yet it has a giant trade surplus with the U.S. that, like a raft of other economic issues, is a bone of contention between the two governments. The two militaries have increased their contacts, but clashes still happen and the U.S. remains worried about a dramatic buildup in what is already the largest standing army in the world.
Amid all that, Obama has adopted a pragmatic approach that stresses the positive, sometimes earning him criticism for being too soft on Beijing, particularly in the area of human rights abuses and what the U.S. regards as an undervalued Chinese currency that disadvantages U.S. products.
Obama recognizes that a rising China, as the world's third-largest economy on the way to becoming the second and the largest foreign holder of U.S. debt, has shifted the dynamic more toward one of equals. For instance, Chinese questions about how Washington spending policies will affect the already soaring U.S. deficit and the safety of Chinese investments now must be answered by Washington.
Originally posted by chiron613
China likes things just the way they are, the US in debt up to its eyeballs, paying it off over time.
Originally posted by Pathos
China Will Own The United States Soon
This is about as much as many people
here at ATS know about US debt.
I remember for YEARS everybody saying that Japan so owned the US
because they were at the time the largest investors.
Who really owns most US debt?
Foreign Investment accounts for only 29% which
includes China, Japan and the rest of the world
China and others are buying US debt because, despite everything, the US is seen as relatively safe investment in uncertain times. (China also likes US debt because it helps keep Chinese exports cheap.) Countries that are a bit riskier will have that reflected in a sovereign debt rating and will have to offer higher yields. But they will still have buyers at those higher yields -- either private institutions or governments that are still net creditors.
Chinese real estate has been booming. Since 2000, year estate investments grew 200% in China. The Chinese Claymore/AlphaShares China Real Estate ETF (TAO), which tracks Chinese Real Estate went up more tan 70% since January 2009.
Now add to that:
1. The demographic nightmare that China will soon be facing.
2. The global financial crisis which continues and China which will see little choice but to loosen its monetary policy even further, slashing Chinese economical growth and result in massive unemployment, which will lead to social instability.
If there is one thing that Europa underestimates than it’s the impact of a bursting Chinese Real Estate bubble. The bubble has grown mainly on the residential side of the market, but with Beijing’s 4 trillion yuan or 586 billion USD stimulus package, the bubble also started growing on the commercial side in 2009. Remember that China pumped worth 12,9% of its GDP in stimulus packages in 2009. By way of comparison: Brazil invested less than 2% of its GDP in stimulus packages to support growth.
With 70 percent of real estate investment in China coming from bank loans, a dramatic drop in land values could send shock waves throughout the economy.
Originally posted by marg6043
reply to post by eradown
Actually the next financial super power will not be China but the UK, that is what financial analyst are predicting, with China second.
Originally posted by FritosBBQTwist
I view this scenario happening in two ways.
First is that our "leaders" truly do not care about the citizens of America, and are willingly giving China all of our assets/money/whatever,
Second is that they are going to milk China for as long as they can, and they have a plan to turn around and erase all of this debt somehow. Only ways I can think of are war and the economy...each which would play dearly with everyones life's.