22 October 2010

Be careful what you wish for: Chinese reliance on Exports

The  US pressures China to be less reliant on Exports and to increase domestic consumption for its economic growth. When that happens, China will indeed be less reliant on the US market and moreover less inclined to buy treasuries and US debt. That could be the tipping point for the US economy. China could then not only cease buying treasuries, it could safely begin selling them. Where then would the US find another creditor so flush with cash and willing to finance its debt?

No comments: