This article discusses that China is withdrawing from their investments in U.S. government debt. China wants to diversify its holdings so they are selling U.S. treasury bonds and investing in markets such as Europe. They are trying to reduce their reliance on the dollar but they are hesitant because if they take out investments, it could weaken the dollar and cause their other investments to be worth less. This should give concern to Americans because China is a huge investor in government debt so if they pull out then the value of the dollar will plummet and it will most likely lose its role as being the dominant currency. I found this interesting because it shows how reliant the United States is on China investing in our government. We should be aware that at any point China could pull out and we should prepare for the consequences that might occur.
http://www.latimes.com/business/la-fi-china-us-debt-20120303,0,1286478.story
Stacy Collyer
I found a similar article that discusses the dependency the US economy has on China. If China suddenly pulls out, then interest rates in the United States would skyrocket, leaving the US in a similar situation as Greece. It will be interesting to see what the coming years will bring.
ReplyDeleteKatie Robinson