AP's Joe McDonald reports:
Chinese President Hu Jintao's meets with President Obama at an April 2 summit in London of the Group of 20.China's premier didn't say it in so many words, but the implied warning to Washington was blunt: Don't devalue the dollar through reckless spending.
Premier Wen Jiabao's message is unlikely to be misunderstood at the White House. It is counting on Beijing to help pay for its stimulus package by buying U.S. bonds. China already is Washington's biggest foreign creditor, with an estimated $1 trillion in U.S. government debt. A weaker dollar would erode the value of those assets.
"Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference Friday after the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets
The death of the dollar as a reserve currency is near.
Speaking about Chinese American economic rivalry, the other kind of rivalry, military rivalry has been heating up in the South China Sea. In a recent London "Times" article on the later, a web commentator made the following observation about the former...
ReplyDelete"China may be America's banker but America also has the right to devalue its currency -at any time- to whatever lengths it deems necesary to survive. So, China may end up holding a lot of -almost- worthless notes. They may feel forced to turn them in before that happens. A game of cat and mouse."
Maybe we risk, not so much a game of cat and mouse, but even worse, a game of chicken. The respective superpower power elites may find themselves racing at each other, each expecting the other to "blink" first.
Of course sometimes a game of bluff of this sort results in both sides crashing into each other.