{"id":307398,"date":"2010-02-11T11:22:07","date_gmt":"2010-02-11T16:22:07","guid":{"rendered":"http:\/\/www.szone.us\/f95\/pla-threatens-chinese-economy-39309\/"},"modified":"2010-02-11T11:22:07","modified_gmt":"2010-02-11T16:22:07","slug":"pla-threatens-chinese-economy","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/307398","title":{"rendered":"PLA Threatens Chinese Economy"},"content":{"rendered":"
On 02.11.10 07:45 AM posted by Derek Scissors and Dean Cheng<\/p>\n

\"\"<\/a><\/p>\n

China’s*People’s Liberation Army (PLA) this month has been trying to threaten the U.S. economically. However, their plan could actually harm China, not America.<\/p>\n

Many, many*Chinese see reunification with Taiwan as a deep emotional issue. But much of the PLA sees it as a way to pad the military budget.*Any attention to Taiwan has Chinese generals demanding some sort of strong action or another, while naturally observing that the controversy justifies more money for them.<\/p>\n

This happened again with the recent announcement by the Obama Administration that*it will*provide limited*arms to Taiwan.*The PLA trotted out its most bellicose officers.*These worthies*promptly argued, among other things, that*China should respond to the arms sale with a bond sale, selling down holdings of American bonds<\/a>.<\/p>\n

Bring it on, guys.<\/p>\n

The idea that China has*important*influence over the United States through its bond holdings is a myth<\/a>.*If*a picture is worth a thousand words, the graphic to the right should be particularly valuable.<\/p>\n

There are only two real economic possibilities:<\/p>\n

1) China sells bonds, for a purely political reason, and finds strong demand from everyone else, here and around the world.<\/p>\n

China*then holds less U.S. government*bonds and others (American banks,*the*Japanese government, ordinary people, and so on)*hold more.<\/p>\n

2) China tries to sell American government bonds, for a purely political reason, but*no one else wants them.*Even in this case there still is no threat to the U.S.<\/p>\n

That’s because China’s attempted sale has nothing to do with the U.S. economy.*People and countries do not*buy*American bonds because China does, they buy because it’s the best financial*option for some particular amount of money.*How good an option it is changes with economic conditions, such as our horrible budget deficit.*But how valuable U.S. government bonds are does not change because the PRC is throwing a tantrum about Taiwan arms. Other buyers of our bonds will ignore this, and there’s even a fun twist.<\/p>\n

If the Chinese government actually listened to PLA bluster and made a grand announcement about selling bonds, they might feel they have to follow through or lose credibility.*But in the case of no one wanting them, that will not work at first.* To find buyers, China would then have to cut the price and take losses on the bonds.<\/p>\n

If that opportunity were to arise, The Heritage Foundation suggests that the Department of the*Treasury buy*the*bonds at the*lower price saving taxpayers a bit of the money the U.S. government is wasting.*At the end of the day, China could have done the U.S. a favor.<\/p>\n

Thanks for the help, PLA.<\/p>\n

http:\/\/blog.heritage.org\/2010\/02\/11\/…inese-economy\/<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

On 02.11.10 07:45 AM posted by Derek Scissors and Dean Cheng China’s*People’s Liberation Army (PLA) this month has been trying to threaten the U.S. economically. However, their plan could actually harm China, not America. Many, many*Chinese see reunification with Taiwan as a deep emotional issue. But much of the PLA sees it as a way […]<\/p>\n","protected":false},"author":4292,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-307398","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/307398","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4292"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=307398"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/307398\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=307398"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=307398"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=307398"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}