China lends money to the US?!

[chharoonahmad]

Hi

In the news they were telling that China lends billions of dollars to the US. I was quite amazed at hearing this. How come USA keeps going, I mean with all those war expenditures etc., in spite of all the borrowing. Does this mean China is richer than the US? Is then China a 'bigger' superpower than USA? Please help me with this. Thank you.

 

[Chinese-Dragon]

Hi

In the news they were telling that China lends billions of dollars to the US.

Trillion+ actually. And trillions more, in US currency reserves.

Does this mean China is richer than the US?

No.

Is then China a 'bigger' superpower than USA?

No. Not even close.

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I hope this answers your questions.

 

[lem34]

Hi

In the news they were telling that China lends billions of dollars to the US. I was quite amazed at hearing this. How come USA keeps going, I mean with all those war expenditures etc., in spite of all the borrowing. Does this mean China is richer than the US? Is then China a 'bigger' superpower than USA? Please help me with this. Thank you.

America is bankrupt. They have a deficit of 14 trillion US$. US has 9% unemployed. 1 in 6 rely on food stamps that is on state hand outs. This is getting worse.

It is only because the US dollar has been accepted as the world reserve currency and this is from the days when they were rich. effectivly they print out a piece of paper which says iou and at the moment the world has been prepared to accept this piece of paper as money.Things will change I personally anticipate that they will hit the tipping point within the next 5 to 10 years. When they hit the tipping point you will see in our lives americans starve and fracture into little countries. The end of the empire. Israel and its 7 millions jews will also face their day of judgement because americans won be there to give them free bullets to kill palestinian children.

I hope this response is helpful.

 

[TruthSeeker]

China loans money to the USA because the trade imbalance in favor of China for dollar dominated goods is so huge that China cannot easily spend all of the dollars it is earning. So what to do with all of these dollars? For the moment, China chooses to loan a lot of these dollars back to the US Government because it trusts the US Government to repay the loan when due. If China could think of a superior (and liquid) way to "park" its foreign currency surpluses, it would do so. Someday, I assume, domestic demand within China will be sufficiently robust that the Chinese people will use their currency reserves to buy goods and services that they want and need, from other countries, thereby "spending" their foreign currency savings.

 

[Chinese-Dragon]

So what to do with all of these dollars? For the moment, China chooses to loan a lot of these dollars back to the US Government because it trusts the US Government to repay the loan when due. If China could think of a superior (and liquid) way to "park" its foreign currency surpluses, it would do so.

Very true.

There is simply no country as big as the USA, when it comes to their economy. So that is where we have to park our dollars, and that is where we sell our goods.

Neither side is doing it for charity, it's just business.

 

[Solomon2]

If China could think of a superior (and liquid) way to "park" its foreign currency surpluses, it would do so.

Over a decade ago guys like me were telling the Chinese gov't to diversify its reserves by diversifying its currency holdings, buying gold more rapidly, and cease selling its silver hoard. Instead it chose to keep buying treasuries and mortgages. By the time the Chinese gov't got the message the distortion had damaged both countries: the U.S. with a deflating bubble, China with illiquid reserves, decreased exports, and lower-valued asset holdings abroad.

 

[TruthSeeker]

There is simply no country as big as the USA, when it comes to their economy. So that is where we have to park our dollars, and that is where we sell our goods.

Of course, China could also "invest" its foreign currency surpluses in tangible assets, such as oil and gas leases, pipeline shares, mines and mining rights in various countries, agricultural lands and operations, etc. But these types of investments are not liquid and carry with them some xenophobic baggage, i.e. charges and fears of economic colonialism. So, China must proceed slowly and steadily to move cash into tangible assets. In my opinion, China is just asking for trouble when it does this in places like Sudan and Myanmar.

 

[Chinese-Dragon]

But these types of investments are not liquid and carry with them some xenophobic baggage, i.e. charges and fears of economic colonialism. So, China must proceed slowly and steadily to move cash into tangible assets. In my opinion, China is just asking for trouble when it does this in places like Sudan and Myanmar.

Choice is a luxury enjoyed by first-world nations.

We are driven by necessity. We can't afford to pick and choose based on such criteria.