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Clinton wraps up her China visit: “Keep buying US Treasury bonds”
As the three-day China visit of US Secretary of State Hillary Clinton ended, a new allegory for the US-China relations was born:
“We are truly going to rise or fall together. We are in the same boat and, thankfully, we are rowing in the same direction.”
That is especially true when it comes to the heavy investment of China in US Treasury bonds. In this way does China not only finance the new massive stimulus package of US President Barack Obama ($787 billion) but could get into financial trouble itself.
If it came to the second round of US mortgage defaults as predicted by analysts, Chinas famous reserves would be dealt another blow. Zhang Ming, economist with the Institute of Finance and Bank at the Chinese Academy of Social Sciences:
“More than $1.3 trillion out of its foreign exchange reserves are dollar assets, China must diversify its use of the reserves, buying more commodities such as oil when prices are relatively lower.”
So the important mission of Hillary Clinton in China was to make sure that the steady flow of Chinese money will not diminish:
“By continuing to support American Treasury instruments, the Chinese are recognizing our interconnection. It would not be in China’s interest if we were unable to get our economy moving.”
Wasn’t there something else in the beginning? Ah, right:
Clinton warns China to not repeat the US environmental mistakes
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