| Rimbaud said below, let me quote: "why is the Chinese Central Bank being so tremendously stupid? You are essentially giving us Americans trillions of renminbi that you Chinese have earned from hard work-- just giving it to us, for free, even though we Americans spend way too much and save too little. We don't save for ourselves-- so, you Chinese (via the Chinese Central Bank) have been giving us your savings." There are many clues to explain this: 1) What made people think that the leadership of these banks are standing on the same side as the national benefits for all people? If these elites would be hugely rewarded financially and personally from using public funds to purchase US treasury bonds, what could have stopped them? 2) What made people believe that Chinese leaderships might have enough leverage of not buying US tresury bonds even if their own concience told them not to? China's economy, having been locked at the bottom of the economic food chain, i.e., OEM manufacturing focused, is very hard to outdo its own limitation of not abiding by external forces. A mere threat of increasing tariff to Chinese products or reduction of imports from China will be enough to put a golden handcuff on the Chinese leadership. A threat of reduction of imports from China by western developed nations will lead to a drastically reduced GDP growth. Chinese leadership is fully aware of that outcome. What I meant is, Chinese leadership may not have too many choices that we thought they would have. After all, China is a very export dependent country. |
China-US Economy Discussion