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Friday, March 13, 2009

When China Gets Worried, I Get Worried

BEIJING - MARCH 16:  Chinese Premier Wen Jiaba...Image by Getty Images via Daylife

See Yahoo News: China "worried" about US Treasury Holdings

If China is worried, it's time to start looking at this whole matter again.

According to the article: "Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference Friday after the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."

"Worried". Premier Wen Jiabao said "worried"

I haven't been worried precisely because China had money, and China was willing to lend the US money. Everywhere else is in a mess, other countries haven't really been trying to help the US and other countries don't have the kind of money China has. It took forever for the G7 to have the first meeting. And since then, Europe has its own internal difficulties - can't agree on form of assistance to its own Eurozone members, amount of assistance etc.

If China is worried, then China is unlikely to keep lending. That is logical. It's worried about the existing assets. Where will the US turn to next?

We may just see a new world order, and a completely new monetary system. WOW!

I have noted China's statements on the need for the G20 to focus on the developing world and the poorest countries in the meeting in April.

From the article:

"Wen also said Beijing wants the G-20 summit in April focus on helping the poorest countries.

The premier said Beijing has met its own commitments to help developing countries by erasing a total of $40 billion in debt owed by 46 countries and giving out 200 billion yuan ($29 billion) of aid to developing countries."

"We must see to it that we show concern for developing countries," he said.

THANK YOU CHINA!! But let's face reality, if the US cannot stabilize that is bad news for all of us. And the US needs China's help - in more than money - to stabilize.

America, the ball is in your court. Ben Bernanke says all you need is the will. Do you know what to do, like he says? Because clearly, you have not yet fully appreciated what is at stake if you do not - or you would have done it. And here's a gentle reminder - what is at stake is much more than China not lending you money, should that be the outcome.

This is really going to be interesting.

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1 comment:

Anonymous said...

China wants to rule the world. They figured that if they owned America's purse strings, then they would control the most powerful country and get their wish. The problem is that China has leveraged itself to become a player in a game where it will be a big loser if America bites the dust.
In reality they have limited options and America calls the shots. I suspect that Premier Wen was talking for domestic consumption as the sweat of a generation of Chinese workers has been converted into a very suspect asset under the guidance of the CCP. Just the law of unexpected consequences at work. Where they have leverage is in influencing American policy on other issues such as Tibet and human rights. I agree that the situation is very interesting, but it is also very dangerous for everyone as moderation is called for. If China continues its export boosting policies in this environment, it could bring down the house of cards as there will be retaliation. Everyone knows China's game and Obama is going to play the staked goat for them.

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Reasoning The Reasons by Deika Morrison is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.