Why China is at America's mercy

[Chinese-Dragon]

To be fair, this Shonalee Biswas does make one or two good points.

But the entire premise is flawed. China is at America's mercy, because America can collapse their economy, and hurt us in the process?

That would be quite epic, if America was a country-sized version of a suicide bomber. Unfortunately for Shonalee Biswas, wet dreams are not the same thing as reality.

 

[pandarunner]

What a dumb roommate.

Exactly what I am gonna say, he is a nerd.

 

[Chinese-Dragon]

If China is not at USA's mercy then why don't you tell how intead of attacking the author just because she is indian ?

Because this same ridiculous argument has been done so many times, yet you guys still post the same BS.

OK first, in order to wipe out our US dollar reserves, the American economy needs to collapse, to the point where the dollar is worth nothing at all. So basically, we are at their mercy if they commit suicide? How does that work?

Secondly, out of our $3.2 trillion in currency reserves, about $1 trillion of that is in US debt. Even if that was completely wiped out, we would still have $2 trillion left, still the largest currency reserves in the world by far.

Thirdly, exports make up 27% of our economy, according to the World Bank. And exports to America, make up only 16% of our total exports.

So basically, if America were to collapse their own economy, they would wipe out 1/3 of our excess currency reserves and force us to find other trading partners for our exports.

They will commit suicide... in order to give us a minor injury? Does that really make sense to you? Hence my disagreement with the article title, and my argument is in fact based on the last part of the article.

"So that leaves them very vulnerable, IF the US dollar were to crash?" asked my friend.

 

[below_freezing]

What an idiot article. As the RMB appreciates, export profits indeed goes down but so do costs. The biggest export of the US to China other than worthless debt, is useful stuff - scrap paper (smartest decision EVER MADE by China to import paper for recycling and reprocessing rather than cut down our own trees), ore, food and other basic resources.

Cut down the debt and get more food, paper and irreplaceable ore.

 

[pandarunner]

Following the author's logic, the complete conclusion would be like this, China is at America's mercy if America defaults the money, and America is at China's mercy if American won't risk defaulting the money.

 

[Abhishek_]

thanks for the monday morning entertainment guys (on both sides)
on topic: pointless article, only intended to rile up members on both sides. US is not going to default, even if it does China will remain more or less unharmed.

and btw a US collapse will hurt India a lot more than China.

 

[Solomon2]

You mean it will be men and women like this who'll imports free market and Reagan-Thatcherite deregulation ideology into China right? Then we can have our very own investment banks that run the country into the ground. Hurray.

I don't know. I mean that men and women like this are truly devoted to public service rather than personal gain, glory, and careerism.

Of course, China will have to entice them to come back. Hopefully with "American" habits ingrained they can then remain free of the historically deceptive practices of Chinese bureaucrats, which led to such absurdities as assuring the Emperors that the Brits could be fought off with 15th-century cannon, even as they themselves prepared their own escape...

 

[below_freezing]

I don't know. I mean that men and women like this are truly devoted to public service rather than personal gain, glory, and careerism.

Of course, China will have to entice them to come back. Hopefully with "American" habits ingrained they can then remain free of the historically deceptive practices of Chinese bureaucrats, which led to such absurdities as assuring the Emperors that the Brits could be fought off with 15th-century cannon, even as they themselves prepared their own escape...

That's not an American habit nor is it part of the American culture unless you forgot the US political machine days from 1890 to 1950.

 

[AnGrz_Z_K_Jailer]

thanks for the monday morning entertainment guys (on both sides)
on topic: pointless article, only intended to rile up members on both sides. US is not going to default, even if it does China will remain more or less unharmed.

and btw a US collapse will hurt India a lot more than China.

^^^^

Abhi.. Thanks for your post but can you enlighten us. How US collapse hurt India? Its doesn't meant I am in favor of US collapse.I just want to know ok..

regards
Jailer

 

[Abhishek_]

^AFAIK, US exports constitute a larger percentage in Indian total exports as compared to China.
As an example, look at the growth numbers during the financial crisis, India slowed down more than China.
And our forex reserves are puny compared to China so obviously we have a much thinner buffer zone in case of a US collapse.
Also keep in mind that if RMB rises after a US collapse it will have negative results for our already lop-sided trade with China.

(a dearer yuan will be detrimental to India, especially in the short run)

 

[JingDong]

Not a good article at all .... a similarly themed, but more logical article is this:

If America's Good Days Are Over, So Are China's - Forbes

Anyway, I think people tend to make a larger issue out of this than it is actually worth. Treasury markets are much larger and deeper than people tend to believe - 67% of US debt is owned by US nationals / institutions. Ever of the remaining 33% which is foreign owned, 25% is owned by Japan, Saudi etc. China's owns 8%. Other interested investors (holding the remaining 92%) will be keen to buy furhter into all of the 8% share if it is sold below prevailing market price. Selling lump-sum in one-go fetches the seller a sub-optimal price.

The key thing is that the US debt is denominated in US Dollars ..... not in a currency which they cannot print. As yet China doesn't have the market power to have US pay of it's exports in a currency other than US dollar (say CNY, for example). The US trade deficit will automatically decline if China refuses to accept dollars for the goods exported.

 

[Gandhi G in da house]

Because this same ridiculous argument has been done so many times, yet you guys still post the same BS.

OK first, in order to wipe out our US dollar reserves, the American economy needs to collapse, to the point where the dollar is worth nothing at all. So basically, we are at their mercy if they commit suicide? How does that work?

Secondly, out of our $3.2 trillion in currency reserves, about $1 trillion of that is in US debt. Even if that was completely wiped out, we would still have $2 trillion left, still the largest currency reserves in the world by far.

Thirdly, exports make up 27% of our economy, according to the World Bank. And exports to America, make up only 16% of our total exports.

So basically, if America were to collapse their own economy, they would wipe out 1/3 of our excess currency reserves and force us to find other trading partners for our exports.

They will commit suicide... in order to give us a minor injury? Does that really make sense to you? Hence my disagreement with the article title, and my argument is in fact based on the last part of the article.

You should have explained it like this .

 

[gambit]

A rather simplistic way to describe things..Not exactly correct..

Look at it this way...If someone make a 'simplistic' assertion on how China can 'collapse' the US economy, just about everyone will jump on that bandwagon. We have seen it often enough. But when the table is turned like what this article is suggesting, then international economic relationship is not that 'simplistic' and assorted mental and rhetorical gymnastics are used to turn the discussion back to the other 'simplistic' assertion that China can 'collapse' the US economy.

 

[Juice]

Dumbass logic..

The problem is if the lender stop lending, it may suffer some loss of earning but US suffer loss of life.

We have all we need. More territory than China, far more of it productive and unspoiled (we haven't been exploiting it for 3000 years). Plus, all those goods we buy? Those are tangible resources flowing from China to US (metals, plastics, etc.)

 

[below_freezing]

We have all we need. More territory than China, far more of it productive and unspoiled (we haven't been exploiting it for 3000 years). Plus, all those goods we buy? Those are tangible resources flowing from China to US (metals, plastics, etc.)

Which we import from Australia and Canada

The US also extracts more of its own oil than China does. GL with that.