China: We hate you, but we hate everyone else more
posted at 10:15 am on February 14, 2009 by Ed Morrissey
In the current financial crisis, many people wonder how much longer China will buy American debt, or whether they will start dumping it and create an even deeper crisis for Washington. China apparently answered that question earlier this week in its assessment of its options — which is to say, none. Like Richard Gere in An Officer and a Gentleman, they’ve got nowhere else to go:
China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its “only option” in a perilous world, a senior Chinese banking regulator said on Wednesday.
China has used the dollars it accumulates selling manufactured goods to US consumers to accumulate the world’s largest holding of Treasuries. …
Mr Luo, speaking at the Global Association of Risk Management’s 10th Annual Risk Management Convention, said: “Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”
Hey, in a world filled with anti-Americanism, that’s refreshing. At least someone loves us. Or … maybe not:
Mr Luo, whose English tends toward the colloquial, added: “We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] . . .we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.”
The colloquial, huh? Happy Valentine’s Day to you too, Luo.
China still could dump US debt, but they’d lose their shirts, and nothing else in the market looks better. Beijing has become a little too capitalist to pull a cut-off-the-nose-to-spite-the-face ploy with its main assets. They need the stability to stay in power. Right now, that means they need to ensure that US debt doesn’t tank.
Feel any better? It’s like having your spouse tell you that she can’t stand you, but she’s sticking around for her half of the retirement accounts, which would get destroyed in a divorce. You feel marginally better, but you sleep with one eye open, just in case she turns into Lorena Bobbitt.