Tuesday, February 9, 2010

Chinese Military Waving the Dump U.S. Bonds Threat.

Senior Chinese military officers have proposed that their country boost defense spending, adjust People's Liberation Army deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan, reports Reuters.
Interviews with Major Generals Zhu Chenghu and Luo Yuan and Senior Colonel Ke Chunqiao appeared in Outlook Weekly, a Chinese-language magazine, published on Monday.

"Our retaliation should not be restricted to merely military matters, and we should adopt a strategic package of counter-punches covering politics, military affairs, diplomacy and economics to treat both the symptoms and root cause of this disease," said Luo Yuan, a researcher at the Academy of Military Sciences.

"Just like two people rowing a boat, if the United States first throws the strokes into chaos, then so must we."

Luo said Beijing could "attack by oblique means and stealthy feints" to make its point in Washington.

"For example, we could sanction them using economic means, such as dumping some U.S. government bonds," Luo said



  1. Words not deeds. These are just threats and posturing. If they were going to do it they wouldn't tell the world.

  2. So, do you think that this is the power elite's answer to plunging poll numbers? Polls suggest that Joe and Suzy Sixpack are finally figuring out that government at all levels is to blame for this mess; so, incite the Chinese to action, then blame those foreigners for everything?

    Audit the Fed? How unpatriotic. You're just helping the Chinese!

    Regulate the to-big-to-exist banks and Wall St? Well, we have a war on, man... we can't be concerned with that right now.

    Meanwhile they're in the back office shredding all the information regarding the AIG take-down and the subsequent looting operations.

  3. There's a lot of talk about the Chinese debt bomb. The problem is if the Chinese set it off they will blow themselves up in the process!

  4. "Fed audit = unpatriotic" honestly there are people who believe that.

    China's debt bomb may blow up in their face, but the US would be hit the hardest. Besides, when their bubble does burst and their money supply plummets, they'll need cash. The easiest way to raise cash is to sell USDebt. Then to keep the RMB down they'll print more cash "for free". While the US deals with the fallout, China can attack India with Pakistan's blessing (offer them Kashmir) to help get rid of some of their 20million+ excess men.

  5. Doesn't look like posturing according to this Business Insider post.


  6. Jason - the article states they will hold "...Treasury Bonds and U.S. Agency debt..." while selling debt with higher risk. This isn't dumping US Govt. Debt and doesn't seem likely it will cause the disruption in the market implied by the headline of this blog.

  7. eFinancial

    You are mixing two stories and two headlines. You need to be clear about what you right.

    The EPJ blog references te Chinese military discussing the sale of U.S. gvt bonds. It's a direct quote.

  8. Jeff - let me perfectly clear about what I am "righting." I am suggesting that the EPJ blog title (whatever its source) is over stating the potential risk based on a review of the article at businessinsider.com referenced by Jason.

    My original statement, words not deeds was a simple observation about the Chinese statement. If they were going to do the deed (dump U.S. Bonds) we would likely see the effect in the form of higher interest rates and a declining value of the dollar long before we would hear the Chinese actually say "We are dumping U.S. Debt." In fact we would probably never hear them say that because it serves no purpose as a prelude to action only as a threat.