China hints it could destroy U.S. economy if it doesn’t get its way with Congress

For years I’ve tried to get people interested and/or concerned over the way in which the US was borrowing from China to fund the extraordinary national debt we have accumulated in the last 6 years. I would sometimes explain that China has a long history of using trade politically, i.e., thousands of years of history in doing so. Most Americans have an impoverished idea of my ancestors (I’m both Korean and Chinese in ancestry) and think of the subjugated Chinese immigrant from films, the flat-footed coolie, or the seductress in the dragon-pattern cheongsam and have never once in my conversations with them taken the threat seriously. Yesterday, this appeared:

Two officials at leading Communist Party bodies have given interviews in recent days warning – for the first time – that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China’s “nuclear option” in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

So, there it is. William Gibson’s science fiction novels are often heralded as being prescient about the internet. But Gibson also wrote of a future where economic warfare was as deadly and serious as conventional warfare, where companies maintained armies and had more influence than countries. He may turn out to be ahead of the curve on that one also.

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3 thoughts on “China hints it could destroy U.S. economy if it doesn’t get its way with Congress

  1. Tony says:

    I find it interesting that you cite Gibson. I remember reading one review of “Pattern Recognition” that stated that Gibson didn’t have to write future shock sci-fi anymore, that the future he had envisioned in “Neuromancer” had arrived.

    I was just talking about China dumping it’s dollars and the people I was talking to couldn’t imagine it happening, that China needs us too much. I kind of doubt that China “needs” us anymore myself.

  2. John says:

    Yes, you are totally right, Alex. It is really frightening and naive to not take it seriously. There is a lot to say, but you’ve kinda said the real thing: this isn’t just about some cheap goods or even human rights. It’s about a politics as powerfully destructive as war.

    I do think China needs the U.S., a lot. Somebody has to buy what they produce. So that’s where I think there is actually aggression between, instead of total vulnerability, but that’s already in war-talk. Yuck.

    I think there are a lot of interesting reasons why folks won’t take this seriously. The ones you mention, and a lot of others. None of which explain anything about why we should forgo this sort of conversation…

  3. jeffreyricker says:

    I’ve heard rumblings about this for years, but never in mainstream media. Also, how fortuitous that Salon.com has an interview with William Gibson published today. I don’t know why I’ve never read anything by him, but now I think I need to correct that.

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