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03-19-2007, 09:22 PM #3
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China and its ONE TRILLION US Dollars
The biggest danger from China holding so many US$ is not that they will buy weapons(they make, and sell, their own anyway) or U.S. companies. The biggest danger is that they could dump all those dollars into the worldwide currency market, which would drive down the worldwide value of the dollar. So, not only would our $ buy less cheap Chinese shit, but also a lot less of everyone else's shit too.
Fortunately for us, China sees it's holdings of US$ as an investment. The Yuan is not a very desirable currency on the worldwide market, so China needs it US$, Japanese YEN, and Euro's in order to get what it wants. It is doubtful they'll want to fuck with it. Personally, I'd be more worried about the fact that Japan has more US$ than China does. The Yen is a more robust and liquid currency in the market so they're not going to care so much about whether the value of the dollar goes down.
In any case, you're right, China does still need us. They have a long, long way before becoming a supreme super power though. China's a weird place in that they are both ultra-modern and third world at the same time. There's a massive amount of disconnect between the coastal cities and the rest of the country. They've also got huge gaps in their infrastructure that need to be filled in. Until they can get these issues taken care of they'll never be a supreme super power.
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