China threatens 'nuclear option' of dollar sales

China's economic situation is much more precarious than ours so if they deep sixed their number one trading partner, they'd probably wind up worse than we would.

They won't do it, though it might be kind of nice if they did, because it might just be what it would take for the Chinese people to finally overthrow their awful government.

Originally posted by Gools
Care to tell the rest of us what that is exactly?

Its easy China unfairly devalues the Yuan on the world market in order to leverage thier labor practices and keep the balance of trade well in thier favor

"truth" outside the real world where markets are "open and free" and that everybody should play by some set of "objective rules".

Why would I feel singled out? Unfair practices can take many shapes and forms. From say the Canadian practice of subsidizing thier timber industries and undercutting industries in the US with artificialy low prices to gain compedative advantage to a country that is dependant on huge exports keeping its currency low for the same effect.

Yes they do not have to play by the rules but nor does the importing company have to either eh? So the US can take steps to ensure its base industries are protected. China makes threats about

Seems to happen mostly when people are about to get their arse handed to them by an adversary they wasted no time in screwing over in the past.

Please elaborate on this, im a bit perplexed. Are you refering to US and China? When exactly has the US screwed over China or is this more a rhetorical soap boxing? China has a what 40 billion a quarter trade surplus with the US for years. Who is going to pick up that slack? Canada? The EU?

There's no such thing as a "fair open market".

I would agree esp. if we are talking about China

Here in ATS we have been debating China’s role as an emerging economic superpower for quite some time.

Still, many think that China depends on America for everything and that if US economy suffers China will go down.

Well that can not be far from some true, China will recover, but can US recover?

While US politicians in power has been fighting a war in the middle east, China has gotten its hold on the countries that US has left behind and forgotten because is too busy fighting in the middle east.

South America, parts of Africa, Iran, Venezuela, Asia and many other countries have business with China now.

They happen to be very generous to other third world countries when it comes to money and loans.

China will not do anything that will hurt their economy but be very aware that China does hold US by the horns.

China has very big influences in US debt holdings, they have powerful lobbying within corporate America, they hold 1.2 trillion of US currency, they can buy any American company when the competition starts to heat up, So what can America government do to China’s power?

No much really because US corporate America, US politicians and our own elected government sleep all together in the same bed with China.

Do we really have to knock Wal-Mart in this discussion? Where else am I going to find quality tartar sauce for $1.23 per unit? I rest my case.

China has been manipulating its currency like already has been point out to finish destroy America free markets.

US companies can not compete anymore with China, yes is unfair practice, but why US has not impose strong sanctions yet to stop China?

Because the have powerful influences in congress through corporate America that do business with China.

US dependancy on China imports is starting to look like US dependancy on foreign oil.

Is call a one way street.

Right now our nation has been exploited by the unfair practices of China and congress seems to talk about it but no doing a darn thing to stop them.

It seems to me that our own politicians and our own Capitalistic system is going to be the downfall of our nation.

I have been writing threads about this topic for months! It is true that the greatest weapon the Chinese have is their economy and the leverage they have over the US economically.

I fear this will be a major cause in the crumbling of the US.

Important related threads:
www.abovetopsecret.com...
www.abovetopsecret.com...
www.abovetopsecret.com...

I think it's a gross overstatement that "americans cannot compete with chinese" especially in light of the low-quality products that have been coming out of there lately.

I think a lot of the "strength" of the Chinese economy is a false front: unemployment is high, exports are only as strong as they are because of currency manipulation by China, pollution is so bad in some areas that there have been riots, most of the population is still desperately poor, there is literal slavery.

Does anyone remember when we thought Japan was going to beat the American economy?

Originally posted by uberarcanist

Does anyone remember when we thought Japan was going to beat the American economy?

You do not understand that is corporate America the one doing business with China on behave of our government.

The Destruction of the Manufacturing Base is Eroding America’s Great Cities

US American manufactures can not compete with Japan and China, US do not have much support from manufacturing anymore, everything we got is on imports.

That is why we have $ 765 billion balance deficit in 2006.

$644 billion on loans from Japan.

$350 billion from China.

Our debt is almost 9 trillion.

We as a nation economically can no sustain ourselves with manufacturing anymore.

At least Japan is more friendly than China.

Man, has this been a train wreck in slow motion.

I warned about this very possibility a year ago - and only now is my prediction coming to the fore. And it's not just China. Every major economic power in the world has us by our short hairs, especially the baddies: China, Russia and OPEC.

While China's influence on American politics was subtle and relatively covert during the 90's through campaign contributions, the influence China and other countries will have on U.S. policy going forward will be very overt and commanded with an economic bullwhip.

What I find really frightening is how the Federal Reserve seems to be frozen in making any decision. On the one hand, it could cut the Fed rate to help the liquidity markets -- possibly saving millions of Americans from losing their homes as their ARMs expire and their rates skyrocket. But the worldwide doubt on the dollar will only snowball at that point, causing foreign investors to dump the greenback and ushering in the Fed's dreaded nightmare scenario of runaway inflation.

At the same time, if the Fed were to raise the rate (they didn't as of August) -- which they would love to do to strengthen the dollar -- the capital crunch will only get worse as the ripple effect would cause more Americans to default on their cheaply-gotten debt and sending further shockwaves into the capital markets, who for some inexplicable reason, forgot what the definition of risk means during the past five years. The end result could be very nearly the same as the situation above: inflation, crashing economy, recession quite possibly sinking into a depression.

So, the Fed is frozen and is taking the stand that if it does nothing then hopefully this mess will work itself out much as it did with the tech bubble back in 2001.

Unfortunately, the tech bubble -- while massive -- did not have a direct impact on the American wage earner. This situation on the other hand has everything to do with consumerism and spending -- and keeping our weak economy afloat.

i. If they tried, we'd simply cancel our debt-holding, that China has.
Would it hurt the dollar? Yes. Would it kill it, such as their 'nuclear option'? No.

ii. They can't hurt the U.S., severely, economically, as they'd be destroying 60% of their export capability.

Originally posted by Iblis
ii. They can't hurt the U.S., severely, economically, as they'd be destroying 60% of their export capability.

Perhaps, but who will take over our nations insatiable need for goods?, remember we as producers can not compete anymore.

Ever heard of painting yourself into a corner? well this notion of China Stockpiling dollars has been known for a long time and the notion they would use this as leverage at some future time has also been known, this could have been avoided long ago.

We must face the facts, the U.S. erosion into a non thinking, non innovative, video game playing its all about fun and games generation, (not including the brave souls who signed up for service and our service) non manufacturing and high skill based society is to blame at this point, we have become dependents on labor based societies for almost everything, hell America is soooo lazy the only reason we still dont have slaves is because of laws against it, so we want to import as cheap labor as possible in the form of illegals and not so educated legals paying them little or nothing to do our own manual domestic labor, it is a shame because at some point all of this will come to a head in either some large scale crisis that could lead to an all out war with China or some other player.

Students of history already know that something like this is probably up at the top of the list as the incendiary trigger that could prompt a war of some sort.

The U.S. basically have sold Junk bonds ala securities backed by the corrupt mortgage industry, propped up the rating of these securities and sold them.

Now we have a country that really in an all out conventional war of without Nukes would probably give us a run for the money just by the sheer mass of their forces, are now calling shots and making threats....face it the tables are turning on this great nation and it is a shame that the United States did not study the fate of the Soviet Union and how it dumped its economy completely into the vast suckhole of the the war in Afghanistan (this in my opinion was a big reason why mr. gorbacev tore down the wall not because a U.S. president in a speech asked him)....we are headed in the same direction as the Soviets found themselves in but the situation may be of much larger impact because of the corruption of big businesses and heavier integration into the world economy, the other factors that prohibit the change in this course are because of the alignment with those in power that make laws and pass legislation that favor corrupt businesses and corporations and in turn enabling them continue to do their dirty work.

I served in the Military back at the end of the cold war but for some reason this is a completely different country and the attitudes of the citizens and government itself have changed drastically, many do not care and many are completely oblivious to how things work in our country.

[edit on 8-8-2007 by phinubian]

All I can say is this is all part of the plan..
The best economist have seen this coming and said WHAT?
Media pundits have said WHAT? DONT PANIC
We have a PLUNGE PROTECTION TEAM..WTF is that?
I bought $7000 dollars worth of gold bullion coins to hedge for the next 12/24 months... along with a smalller amount in silver coins..
I know its FOOLISH but you know what I sleep better at night.
M3 money supply whats that number?
Whats INFLATION.? The number of dollars printed with no goods or services to back them after liquidating your GNP on any given day.
Create dollars out of thin air...PRINTING presses in North Korea and RUSSIA do just that...
You can count on CANADA to support you in any way possible..but the Saudis have all ready been quietly moving money into Euro's...its a sure thing short term..
CHINA...and WALMART & the American CONSUMER..need to take it to heart...its the NEW A B C BUY Anything But Chinese Products.
I am proud to say that in the last 5 years I have been to Walmart less
than 2 times in a year...and purchased nothing from them in the last 3 years... My own personal BUY NOTHING FROM CHINA CRUSADE.
Try and do it..it's hard..My shoes were made in England and cost 3 times as much as the $20.00 that WALMART wanted for leather shoes..made with prison labour in China.
In DOLLAR STORES across this continent cheap imports are sucking the life out of American Industry..ITS' A GLOBAL MARKET RIGHT...
The NOTIONAL IDEA OF PROFIT and plain old greed is at the root of this.
Do we want to work for Chinese wages NO.. DO we want to live at their standard of living and give up our own NO..then the simple thing to do
is to MAKE A SHIFT in OUR BUYING HABITS...AS OF TODAY.
BUY AMERICAN BUY CANADIAN...VOTE WITH YOUR DOLLARS
It MIGHT BE TOO LITTLE TOO LATE..but at least you can say you tried.
I know for a fact that I did and I saw this coming 5 years ago..a problem that started a decade before I noticed it.
We did this to ourselves.
BUY the A B C's Anything But Chinese products

Great Thread, thanks for posting this.

FredT If someone says here take this gun and shoot that person, will you then do so because they told you too? No, of course not. And if you were too, would you need to take responsibility for the shooting, or the person telling you to shoot? The one that squeezed the trigger is responsible.

And from an economic standpoint, the US squeezed the trigger on itself by forcing the Chinese economy to open up (into what they themselves called an open market) in order to purchase cheap goods, move labour outside the US and drive consumption within US borders (consumption is 70% of US GDP). The demand came from the US, the Chinese supplied like any country would in order to strengthen itself.

So why you would imply that the blame may not lie with the US somewhat surprises me. You don't want to bleed? stop cutting yourself. You don't want a huge debt, stop buying consumable crap that satisfies your wants but not your needs. Perhaps I misinterpreted your comments, please correct me if I did.

What most US citizens don't want to acknowledge is that the US has been a diplomatic bully in the global arena for a long time (no disrespect, it's just a fact), so anytime that another country can create some leverage, of course they will take it, isn't that how the US became so strong in the first place?

Another pointer is that most people think that if the US economy collapses that the chinese will follow suit. Sure, it will not do them any good, but at least they can stop buying US Dollars with their profit margins and invest that money into its country, infrastructure, people etc, instead of financing continued US consumption (which is the real reason the US economy is in such debt). Many chinese companies will go down, but on the grand scale of things, China will come out in a better position than the US financially.

I predicted in another thread that the Chinese would throw their weight into the fight when their currency reserves outsized that of Saudi Arabia, which is USD1,6trillion. Now that they are doing it sooner is probably to ward of the increasing pressure from the US to revalue the Yuan, combined with the sudden increase in negative reports about chinese products (the quality was no better 3-4 years ago, did anyone hear anything then?)

I have been in chinese factories, I have helped set up production lines there, and they are as interested in increasing the quality of the product as the sale price of the product allows them to be. You want better quality, no problem, just pay for it instead of expecting the best for the cheapest price. You can't have it both ways...

The fact that the Chinese are threatening to sell their dollars should be a given, if they are smart they will either invest most of it in commodity markets overseas or use as much as possible to sink the dollar (even if this means that their 1,33trillion becomes worthless). Why sit on a stockpile that is shrinking in value daily anyway?

Originally posted by Foppezao
Then those countries will have to switch to the euro as well. And so the dollar will fall spirally.

Unfortunately it doesn't work that way.

First off, the Euro is a relatively new currency and cannot just be traded in for the trillions of dollars out there (there is not enough Euros). The sheer demand will spike the Euro's value up to enormous heights while the dollar, yen, middle eastern currencies, and yuan all depress which means Europe will not be able to export ANYTHING. It would be very bad for Europe.

I assure you, Japan, Saudi Arabia, Iran, Nigeria, Europe will not be happy that China has dumped so many dollars and rendered their reserves useless. And they wouldn't be able to get nearly as much Euros for their dollars if the dollar depreciates.

---What do I think? Nothing will happen.

Go to "Any " store.......any. 89% of all products are made in China. From Hallmark to Saks Fifth Ave. You all don't shop much do ya..

I think I would like to invest in walmart as it is one of the biggest holders of gold in the world. as is china, and Iran which pulled a lot of gold in before the sanctions took effect. Sounds to me what we have here Boys and Girls is one long S*** sandwhich, and we are all gonna have to to take a bite . The Russians and Koreans printing counterfiet bills and us printing money like crazy to cover our tails, and not knowing how much has been printed doesn't help either.

Well Here goes, somebody pass me the pepper..
Bon Apetite !
Sys

Originally posted by grover
They don't have to invade like they did in the Korean war; all they have to do is threaten to call in all the notes they hold to bring our economy (and any pending military action) to a screeching halt.

I can see it now. Bush refusing to pay because that would be providing material support for terrorism. Or some other rubbish, citing some classified document that he says gives him the authority to do it.

Originally posted by marg6043
It seems to me that our own politicians and our own Capitalistic system is going to be the downfall of our nation.

Carl Marx spotted this one a long time ago and it's very ironic that the "rope" was sold to communists........

Well, well... good that America has spend gazillions of $$$ in Military and Blackop projects, built FEMA concentration camps for their own citizens etc. Of course they saw this showdown coming.

Those US Think Tanks are not stupid. The problem is: America will try to solve this with military power again. But having so many enimies in the world today, they will fail. They know this.

But they have larger plans. Depopulation. Read the message on the Georgia Guidestones. The first sentece reads "Maintain humanity under 500,000,000 in perpetual balance with nature."... the whole world is expecting the BIG event. Do you all really think we can go on for another 50 years like this. By 2050, world population is projected to reach TEN BILLION, a 40% jump from today's 7 billion, and more than six times the 1.6 billion people believed to have existed in 1900.

Come on guys. This world is sick of us - humans.

[edit on 8-8-2007 by Terrapop]