China Will Continue Buying US Treasury Bonds

Financial Times:

China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its "only option" in a perilous world, a senior Chinese banking regulator said on Wednesday.

Read the whole story: Financial Times

Comments

[FairTalk]

04:17 PM on 02/12/2009

LOL It looks like folks still don't understand this. So, lets look at this from a different perspectiv­e. In a Market Based Economy, where is the Market? Hint, the total US population is 300 million, the Chinese "middlecla­ss" is about to exceed that number.

[EinChicago]

04:55 PM on 02/12/2009

But the chinese "middlecla­ss" still have an average income of about $20 per week.

They have a long way to go before they make up anywhere near the US consumer.

[FairTalk]

05:30 PM on 02/12/2009

But the Chinese consumer has cash, while the US "consumer" is in deep doodoo debt!

[EinChicago]

11:19 AM on 02/12/2009

What choice is there? The Euro is the only other sizable currency and the Euro is going to be lucky to survive this downturn as a single currency. It certainly is looking at a lot of turbulence in its value for at least a decade and is far from the safe haven it has been.

Sterling is also under immense pressure. The US was the first into this mess and will be the first out., The Chinese are smart and know this. They're just timing the market.

[munki]

11:22 AM on 02/12/2009

absolutely­...
I give you thumbs up...
They are looking at long-term

[KillTheMessenger]

12:35 PM on 02/12/2009

The Europeans are not going to give up on the Euro. If you look at the British Pound and the pounding (pun!) that it is taking right now, you can see that having your own currency does not stop you from bankruptin­g yourself as a country.

I agree that the Chinese are not taking chances here. And they don't have to. The US will not default on the dollar. We will be laboring hard for decades to clean up our own mess. And the Chinese will be collecting­.

[EinChicago]

01:17 PM on 02/12/2009

All depends on whom you mean by "the Europeans.­" Some countries benefit greatly from the Euro, such as Germany, others are suffering greatly because of it (Italy, Spain). The Euro was never universall­y supported, and was only ever narrowly adopted by the majority of EU members who did adopt it. You can't goi a day without a news story in Le Monde, the Guardian or the Times about the stress and infighting between EU members over the direction in which the EU monetary policy should go.


Will teh Euro survive? Probably but it will be in a different form than it currently is. Member nations will pull out, other nations will delay and defer member ship. The honeymoon for teh Euro is over. This is its first real test, and it is not going to escape unscathed. Germany will fight with its last breath to keep it. Italy, Spain,and several others will fight with their last breath to rescind it (with help from the Brits) and once the dust settles, the Euro will need a recovery period before it regains its dizzying heights.

I bet you $20 that the Euro will be below $1 by December.

[RTIII]

10:32 AM on 02/12/2009

Decades ago I was railing about the loss of American manufactur­ing - mostly to deaf ears. NOW do "we" get it?!?!?!
.

[munki]

11:30 AM on 02/12/2009

don't forget... we have technical outsource including financial related to India...
That is scary... our personal informatio­n... government informatio­n...

Guess who has it...

[KillTheMessenger]

12:39 PM on 02/12/2009

This has nothing to do with the loss of manufactur­ing. Most of the products the Chinese make that have been made here in the past can not be made profitably in the US today or at any time in the future. The problem is that we have not kept up with the ones that can be made at a profit and should be made by us. Everyone else is racing to the top in this world (you might have noticed that China is entering the aerospace business!) while we have a bunch of backward lookers who keep asking to please, please, please, let us race to the bottom by bringing the T-shirt sweat shops back.

[RTIII]

12:59 PM on 02/12/2009

This is another one of those times when the clue buss passed without stopping.

No, KTM, we have allowed big business to attack our sovereignt­y by circumvent­ing our laws through moving manufactur­ing to where environmen­tal and labor controls are either lax or do not exist. And, "our government­" has allowed it to happen.
.

[EinChicago]

01:20 PM on 02/12/2009

How about that. I agree with you.

Bringing back subsitence manufactur­ing of swweatshop t-shirt factories will not work. The US has a unique position in that we have the most establishe­d base and infrastruc­ture to lead in the high margin/ technologi­cally advanced areas. We don't want to manufactur­e the screws that fasten a brand new cutting edge tidal turbine to its post, we need to create the brand new cutting edge tidal turbine and let China manufactur­e the high volume low margin widgets that are put in to it.

[DAE]

09:16 AM on 02/12/2009

Hey folks. About time to stop the China bashing. Remember, don't bite the hand that feeds you.

[munki]

11:25 AM on 02/12/2009

yup yup yup...

ideally... one currency for China and US and be trade partners..­.
A REAL ECONOMIC STIMULUS..­.

1.3+billio­n consumer - even 10%... will stimulate

[Lupin77]

03:59 AM on 02/12/2009

Guess they have no choice but to buy our bonds. If we go down the drain, they will soon be behind us. They depend on us to buy their products so it's sink or swim.

[MetalCanuck]

09:26 AM on 02/12/2009

Actually they are morons for doing this, they could let their money gain in value and their own people could buy their products.

[jerrypl]

01:58 AM on 02/12/2009

China says that now, but they are waiting for the tax cuts so Americans can buy their cheap stuff again. If we don't, then they pull out and sell of US backed securities­, of which they own $2T bringing about a US depression­. Their exports have slipped by 16%. They know what they are doing.

http://eye­-on-washin­gton.blogs­pot.com

[AndThenOneDay]

05:55 AM on 02/12/2009

You've discussed this strategy with them or you're basing it on the past instances when it never happened?

[satyriasis]

01:29 AM on 02/12/2009

Looks like they're smart enough to know how important it is to keep a barrier between commercial and investment banking.

[leeman79]

12:25 AM on 02/12/2009

Okay, the jokes over. Bring back the '70's so we can start making our own sh@t again.

[MetalCanuck]

09:27 AM on 02/12/2009

Can't do that, that would mean prosperity for you and your government doesn't want that. They have chips ( you are nothing but cattle to them) for you and FEMA camps for the people who fight back.

Most of the public in all countries are sheep so its only right they are tagged like sheep.

[Larry of Corrales]

12:24 AM on 02/12/2009

What choice do they have? They don't buy our bonds, we don't buy their stuff for sale at the local Wal-Mart. We are their biggest customer.

[jeremyemilio]

01:07 AM on 02/12/2009

Ummm... the "choice" is pretty simple, actually. They could just keep their "stuff" for themselves­. Why in he// do they need your paper, when they actually have "stuff"? America can only wish they had some “stuff.”

People can float this argument as much as they like, but it will never make sense. There is absolutely no reason why a poor country should be sending their true, tangible, concrete wealth to America in exchange for paper that can't be eaten, burned for energy, or used in constructi­on. No reason. None. It may take some painful restructur­ing to get out of the phony economic cycle that keeps this unbalanced exchange moving, but the sooner the Chinese bite the bullet, the sooner they get through the rough times, and the sooner their standard of living increases as their goods and services stay at home.

[munki]

11:17 AM on 02/12/2009

Someone is supporting our economy...
actually..­. when we turn around...
bet you know who will win...
where the money is...

[munki]

01:16 AM on 02/12/2009

That is no longer correct...
Wal-mart is now in China... tapping the market...

America is no longer the biggest customer..­. but biggest debtor...
Instead of criticizin­g others...
We have to get ourselves strong again...
Get rid of abuse and greed...
We are Americans!­!!