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China Daily, People's Republic of China

It is Time for China to Use its 'Financial Weapon' on America


Should China use its massive holdings of American debt to interfere in U.S. domestic politics? According to this column by Senior Editor Ding Gang of the state-controlled People's Daily, American arms sales to democratic Taiwan undermines China's sovereignty, and must be countered regardless of the financial losses to both the U.S. and China.


By Ding Gang




August 8, 2011


People's Republic of China - China Daily - Original Article (English)

Vice President Biden meets China's paramount leader, Hu Jintau: Whatever the smiles on camera, Biden is likely getting a tongue-lashing from America's largest foreign creditor.  

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If the United States moves forward with its plan to sell weapons to Taiwan, the time will have come for China to use its "financial weapon" against America and teach it a lesson. China has never wanted to use its holdings of U.S. debt as a weapon. But the United States is forcing it to do so.


On August 1, the U.S. House of Representatives finally passed the debt ceiling bill. On the next day, 181 House members signed a letter to President Barack Obama asserting that the federal government should quickly approve a sale of F-16 C/D fighter jets to Taiwan to help ensure "peace and stability across the Taiwan Strait."


On August 2, the U.S. Senate also passed the debt ceiling bill, and Obama signed it into law. Shortly thereafter, the U.S. Treasury obtained authorization to issue $400 billion in new debt. Should China again be the largest buyer of U.S. debt?   



Despite knowing that creditor countries, particularly China, would be the largest buyers of its new debt, certain arrogant and disrespectful U.S. Congressmen and women have completely ignored China's core interests, pressuring President Obama to sell advanced jets and even a package of weapons upgrades to Taiwan.


If China stops or reduces its purchases U.S. Treasuries on a large scale, they will lose value, as will the U.S. Treasury holdings already in China's possession. But as the situation has gotten out of hand, allowing politicians in Washington to continue their game may lead to even worse losses.


American arms sales to Taiwan may create jobs for the United States, but they will do little to improve the capacity of Taiwan's military to compete with the Mainland's. The essence of the problem is that some U.S. lawmakers have a contemptuous attitude toward China's core interests, demonstrating that they'll never respect China. If China fails to strike at such people until they feel the pain, Sino-U.S. relations will always be constrained, continuing their roller-coaster quality.



Global Times, China: China Should Link Taiwan Arms Sales to U.S. Debt Buys
China Post, Taiwan: What are the Americans Actually Selling Taiwan?'
Taipei Times, Taiwan: We Taiwanese 'Must Risk Our Lives' for Freedom

Taiwan News: Inadequate U.S. Arms Deal Shows Failure of Taiwan President

Global Times, China: U.S. Arms Sale to Taiwan 'Not Necessarily Bad'

Die Tageszeitung, Germany: Taiwan Arms Sales a Gut Check for U.S.

Rceczpospolita, Poland: China Feels Her Oats at America's Expense

China Daily, China: U.S. Weapons Sale to Taiwan will 'Sour Ties'

Taiwan News, Taiwan: Taiwan Leader Welcomes American Weapons Deal
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Le Monde, France: Charting the Tortured Path of the Tea Party
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Halting or cutting back massively on purchases of U.S. Treasury bonds will to a certain degree inflict losses on China. So China must endeavor to cut its losses and turn a situation of passivity into one of action. China should ponder ways to directly link U.S. Treasury bond purchase to American domestic politics, while adopting measures to gradually adjust the structure of its foreign exchange reserves.


For example, China could link the amount of U.S. Treasury holdings to U.S. arms sales to Taiwan. Furthermore, it could require international credit rating agencies to further downgrade U.S. Treasuries to force the U.S. to raise interest rates. China could also impose limited trade sanctions on states of U.S. Congress members who vigorously advocate arms sales to Taiwan, which would negatively impact employment in their states.


Because this is money earned through hard work by the people, China is unwilling to arbitrarily use its holdings of U.S. Treasuries as a weapon. But when confronting threats to China's sovereignty, it has no choice but to defend itself.

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[Posted by WORLDMEETS.US Aug. 25, 1:35am


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