On a visit to Beijing, Joe Biden won points for eating at a modestly-priced

noodle and dumpling shop, but Beijing is skeptical that he and his fellow

Americans will tighten their belts at home and end dollar depreciation as

a matter of policy to cut the U.S. budget deficit.



Huanqui, People's Republic of China

China Should Link Taiwan Arms Sales to Purchases of U.S. Debt


Beijing is frustrated over its lack of leverage over U.S. monetary policy, since as the dollar depreciates, China's dollar holdings lose value. But according to this editorial from China's state-controlled Global Times, Beijing still has a card to play. This editorial suggests that unless the U.S. halts arms sales to democratic Taiwan, another issue it considers vital to its interests, it may cut back on future purchases of U.S. Treasury bonds.




August 17, 2011


People's Republic of China - Global Times - Original Article (Chinese)

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.  

BBC NEWS VIDEO: Vice President Biden assures Beijing that U.S. will 'never' default on its debt, Aug. 21, 00:01:07RealVideo

U.S. Vice President Joe Biden has begun his visit to China today. Coincidentally, today is also the anniversary of the signing of the August 17, 1982 Sino-U.S. Communiqué [on the Taiwan question]. On this visit, a wide range of issues will be discussed, but the primary topic is likely to be the debt of the United States.


When asked the question "Is China an ally or an adversary?" during a presidential election debate in 2007, Biden responded, "They're neither. The fact of the matter, though, is that they hold the mortgage on our house." He also offered a way to bring that situation to an end: stop the Iraq War, raise taxes on the wealthy and cut the deficit.


Now, with the United States gearing up for another presidential election, the situation in Washington is no better than it was four years ago. On Capitol Hill early this month, a major crisis was only avoided at the last minute. The epic bipartisan struggle unnerved the entire world.


Liberated from the need to make any campaign commitments, Biden now has an opportunity to better-explain American policy to his Chinese hosts, who are worried about Washington's capacity to maintain fiscal discipline and get its economy back on track. Newly-released U.S. economic data doesn't bode well.   



Biden meanwhile is confronting a far more assertive Chinese public, which is flexing more influence than ever over government affairs. The public is demanding that the government better utilize its massive foreign exchange reserves. Chinese holdings of $1.1 trillion in U.S. debt translate into nearly 8,000 yuan [$1251] for every Chinese citizen.


At the moment, convincing the Chinese public of America's capacity to honor its commitments is an uphill battle. The 1982 Communiqué serves as a framework for gradually resolving the historic problem of American weapons sales to Taiwan. But in the three decades that followed, the issue has emerged again and again to unsettle bilateral relations.


Within the United States, there is a certain sentiment that China is caught in a "dollar trap," meaning that it is at the mercy of a depreciating greenback. This is incorrect. While a certain amount of loss on this investment appears inevitable, China still has a card to play. A number of Chinese academics suggest linking China's continued holding of U.S. debt to other aspects of Sino-U.S. relations - including arms sales to Taiwan.


This is a viable option. The United States should remember that it has the most to gain - or lose - from a stable dollar.



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
Magyar Nemzet, Hungary: Bachmann: Will 'One-Eyed Monarch Lead the Blind'?
Hispanidad, Spain: How Spain Can Build its Own 'Tea Party': Copy Sarah Palin
El País, Spain : Tea Party 'Endangers Health' of American Democracy
ABC, Spain: The Misguided Demonization of the 'Tea Party' Movement
Frankfurter Rundschau, Germany: 'Radical' Republicans Threaten America with Ruin
Le Monde, France: Charting the Tortured Path of the Tea Party
Le Temps, Switzerland: America's 'Cry of Agony' Through the Tea Party
Romanian Libera, Romania: Tea Party Activists Reflect U.S. Checks and Balances
Excelsior, Mexico: Paradox: The Tea Party is 'Determined to Help Obama'
Le Figaro, France: The Tea Party: An 'American Fever' that Will Soon Pass
El Universal, Mexico: The Tea Party and Immigration: Obama's Ace in the Hole
Tageblatt, Luxembourg: Prepare for 'Tea Time' in America
Upsala Nya Tidning, Sweden:
U.S. Should Choose Patriotism Over Party Tactics
Cotidianul, Romania: The Tea Party and the Workings of American Democracy

FTD, Germany: Why Obama Shouldn't Listen to the Tea Party
La Jornada, Mexico: Glenn Beck and the New U.S.-Right: 'Like a Horror Movie'

Die Zeit, Germany: The Head-Spinning Rate of Change in American Politics

Folha, Brazil: Obama: An American Anomaly?


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[Posted by WORLDMEETS.US Aug. 21, 4:46pm


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