China Worries About Its Holdings of $1 Trillion in U.S. Government Debt
Concern could lead to Beijing reducing its role in financing the U.S. deficit
As the global financial crisis deepens, China has expressed concerns about whether its some $1 trillion in investments in U.S. government debt will be secure.
"We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried," Chinese Premier Wen Jiabao told reporters at his annual news conference today.
He didn't detail his concerns, but analysts say one could be that the dollar's value will fall over time, making China's investments worth less.
Wen said China will be keeping a close watch on the American economy. The country's foreign minister, Yang Jiechi, met with U.S. officials in Washington this week to discuss economic policy. Chinese President Hu Jintao is expected to meet President Obama at an April 2 summit in London of the Group of 20 major economies.
Wen didn't indicate any shift in Chinese policy toward U.S. investments and said that his government is willing to lend the U.S. more money and is in the financial position to do so. China, he said, will "take international financial stability into consideration" because that stability is interlinked with China's own interests. China last year surpassed Japan as the No. 1 foreign holder of U.S. treasury securities.
Still, the immediate effect of Wen's comments was to drive down U.S. currency in Asian trading.
Meanwhile, positive news from General Motors and Bank of America, both of which say that their financial situations are improving, helped Wall Street rally this week. Even so, a Thursday report from the Federal Reserve showed that Americans lost about 18 percent of their net worth over the course of 2008, a sign that, positive indicators aside, the country has a long way to go.
- Read more about the Obama administration economic policies.
- Read about how China will test the Obama administration.
Reader Comments
Bath in fire America will rebirth - Phenix Project
You people think America is toasted? You people are so fearful?
America will come back far better with most, if mot all, current problems solved;
America will start all over again still at the commanding lead of the world;
God is my witness, I truly believe this is the beginning of a new beginning of America.
America doesn't need to blame anyone and any thing anymore;
America doesn't need to... Let me stop here before someone going to call me crazy or lying;
We shall see and we shall find out! May God be with us!
American Debt - Chinese loans
Unlike most Americans Asians plan long-term. They look so far ahead that the average person would be astonished. This American debt of over a Trillion Dollars is no accident. They opened the door and we walked right on in, another way of putting it is "they dug the hole and we leaped in, head first". To hold the IOU's of your most dangerous adversary and competitor is a position only the most intricate planning could achieve. The Nation of China has so many people that they can afford to lose/kill/remove tens of millions of their own citizens, if required. So don't think for one minute that they don't have the guts to dump "dollars" if needed to prove a point (i.e. stay away from our naval/submarine bases and look the other way when we retake Taiwan). Does anyone remember the "waves of Chinese" that "just kept coming" during the Korean War? Does anyone remember the patience of General Giap during the Vietnam War against the French and the Americans? We are at the beginning of the end insofar as the American Empire is concerned and our greed was our undoing, the one thing the Chinese could count on.
American money made in China
Every single American that is been financially devastated by our own politicians ineptitude should write to china and tell them to get in line.
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