China has lent a staggering amount of money to the U.S. government, said Beijing’s Huanqiu in an editorial. China now holds about $770 billion of U.S. debt, and we continue to buy U.S. bonds—“despite the fact that the continuous weakening of the U.S. dollar is decreasing the value of debt holders’ wealth.” The weak dollar hurts China in another way, too, since China is not only the largest holder of U.S. debt but also the largest holder of U.S. currency reserves. But there may not be any other option. Many analysts believe that the other major global markets, Europe and Japan, “are quite possibly worse off than America.” In short, U.S. debt may be the least worst option. “It is like trying to pick a not-so-rotten apple out of a pile of rotten apples,” says Dr. Hu of China’s Academy of Social Sciences Financial Research Institute.
But will the U.S. ever be able to repay? asked Liu Meng Xiong in Hong Kong’s Oriental Daily. The American government is merely reflecting the bad spending habits of the American people, and that is cause for concern. Americans are used to borrowing money to buy anything they want—not just houses and cars but also furniture, computers, and luxuries like plasma TVs. “They don’t even stop to consider whether or not they have enough income to cover their expenses when they whip out their credit cards.” Such unconstrained consumption coupled with greedy policies by U.S. banks produced the “financial tsunami” that has brought “the entire U.S. financial system to a near collapse.”
And now China is expected to bail out the U.S. by keeping our money flowing, said Lau Nai-keung in Beijing’s China Daily. When the situation was reversed, the West wasn’t nearly so magnanimous. During the Asian financial crisis of 1998, which was caused by “Western investment bankers and hedge fund operators,” the International Monetary Fund made the Southeast Asian nations swallow “bitter pills” of reform. It wouldn’t lend them money unless they promised to slash spending and let their economies shrink. Now that the West is in need, though, it wants China to “pay as told without knowing why and for what.” China should get something in return.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
And it will, said Beijing’s People’s Daily. The U.S. will have no choice but to allow China more influence in the “new international financial order.” After this financial crisis is over, new institutions will have to be created, and China will be in a position to ensure that the West does not “monopolize everything.” Thanks to our “socialist market economy model” and the industriousness and savings of our citizens, China is now “one of the few countries in the world with money at its disposal.” That means China deserves to have much more say in how the global financial system is run.
Create an account with the same email registered to your subscription to unlock access.