Chinese see U.S. debt as weapon

<i>At the State Department, spokesman P.J. Crowley dismissed the economic threat as potentially self-defeating. "That would be biting the nose to spite the face," Mr. Crowley said. "The economies of the United States and China are intertwined."</i><p>The effect will be to lower the dollar value which would be <i>good news</i>. (That is how Argentina came out of its Debt Crisis). It will also drive manufacturing back to the United States, where it belonged in the first place.<p>I always advocated that America should have imported the cheaper labor - like it did for many years - rather than exported the jobs.<p>Bottom line wish for it, if you live in the States.

Don't tell me that they only thought that the Chinese might do something like that now, it's not as if that wasn't a predictable move.<p><i>Of course</i> the Chinese will use US debt as a weapon, just like the US would use it if the situation were reversed.<p>Don't forget that Russia crashed because of being unable to keep up with the spending patterns of the US, not because of some moral overweight or military pressure. Their economic structure wasn't capable of matching the US and the Afghanistan war (the previous one, the one 9/11 was an outgrowth of) sealed the deal.<p>The US is in between a rock and a hard place economically when confronted with China, a massive sell-off could destabilize the dollar to the point that traders would favour other currencies (most likely the Euro), and that would accelerate the fall. If you live in a glass house you should not throw with stones.

I pointed this out last month. Got downvoted, though.<p><pre><code> How long do you think Taiwan is going to last as an autonomous entity, now that it can no longer rely on the US for military support, because the US is in hock to the PRC? </code></pre> <a href="http://news.ycombinator.com/item?id=1050622" rel="nofollow">http://news.ycombinator.com/item?id=1050622</a>

A sort of side note: I suspect what's got the PLA <i>really</i> upset is the proposed sale of Patriot PAC-3s to the ROC (this is the dedicated ballistic missile killer version, with four smaller missiles in each launcher cell).<p>You don't have to have a totally effective ABM system to make a first strike difficult to impossible, since your opponent <i>can't choose which missiles get through</i>. I.e. to be absolutely sure you take out a particular target, you have to massively saturate it ... and you can't afford to do that with all the first priority targets.

"A group of senior Chinese military officers" sees US debt as a weapon. Which of course they would, however, whether the civilian leadership shares their view is far less certain. I suspect that China's civilian leadership are far more worried about maintaining sufficient economic growth to avoid civil unrest and uprising, obliterating the US economy is about the last thing they will want to do.