Image credit: Nelson Ching/Bloomberg News/LandovFrom The Atlantic:
Americans know that China has financed much of their nation’s public and private debt. During the presidential campaign, Barack Obama and John McCain generally agreed on the peril of borrowing so heavily from this one foreign source. For instance, in their final debate, McCain warned about the “$10 trillion debt we’re giving to our kids, a half a trillion dollars we owe China,” and Obama said, “Nothing is more important than us no longer borrowing $700billion or more from China and sending it to Saudi Arabia.” Their numbers on the debt differed, and both were way low. One year ago, when I wrote about China’s U.S. dollar holdings, the article was called “The $1.4 trillion Question.” When Barack Obama takes office, the figure will be well over $2 trillion.
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My Comment: This interview is a testament to the growing financial clout of China. Ten years ago it was only a dream that China would have currency reserves in the trillions. Today .... it is a reality.
The impact of these reserves cannot be underestimated. With a growing and modernized military, and a very active foreign policy ..... this combination will start to rub other power blocs and perceived spheres of influence the wrong way.
We see it already in Africa, U.S.-China trade relations, and in North Korean nuclear talks.