What should China buy with its $3.9 trillion reserves?

[LeveragedBuyout]

The US won't default 'cause you can always print more dollars to pay-off the debt & the 'reserve currency' of the world that it is isn't going to loose its value any time soon; the worst it'll probably do is that it'll lead to Inflation !

I think it might already have; on my recent trip to the US I found it at least twice (if not more) expensive than I found Singapore in my previous year's trip !

That inflation harms Americans, first and foremost. For that reason, it can't go on forever. You can already see the austerity beginning, with the Tea Party forcing through the so-called "sequester," but that's only the beginning. You'll know we are serious when we reform our welfare state (Social Security and Medicare). Unfortunately, with Democrats in control, the pendulum has continued to swing to an even further extreme, with Obamacare.

What if RMB itself becomes a world currency? It's not too far to be seen anyways. I think it's a more lethal change for US

It could happen, but only if China floats the RMB and develops its financial markets. That would require a more liberal environment, smarter regulation, and, counter-intuitively, a budget deficit. The US has the most deep and liquid market because we issue so many treasuries that any buyer or seller can get in or out quickly (liquid) and their trades don't affect the price very much (deep). Until China's debt markets are similarly large, the RMB can't serve as the reserve currency.

 

[Armstrong]

That inflation harms Americans, first and foremost. For that reason, it can't go on forever. You can already see the austerity beginning, with the Tea Party forcing through the so-called "sequester," but that's only the beginning. You'll know we are serious when we reform our welfare state (Social Security and Medicare). Unfortunately, with Democrats in control, the pendulum has continued to swing to an even further extreme, with Obamacare.

You know forgive me for saying thus & do apologize if its a bit callous 'cause it isn't my place to criticize but for a country that commands the kind of economic muscle that the US does I saw a lot of poverty there; I can't recall a single street in Chicago or NYC where I didn't see some homeless guy or gal asking for money !

I did't however see any in Washington or Buffalo (the Niagra area) for that matter !

Why not learn from the Scandinavians ? I know I'd want Pakistan to !

 

[LeveragedBuyout]

buy fertile agricultural lands from other countries or littoral states. in the future a healthy water table and arable land will be much more valuable than the paper stocks and derivative-ponzy based economic numbers of today.

Already happening.

Chinese firms and Gulf sheiks are snatching up farmland worldwide. Why? - The Washington Post

 

[Chinese-Dragon]

Agreed, the US and China are in a tight embrace. That's why, despite the sometimes heated rhetoric, I think we will have fairly good relations over the next few decades. We need each other, even if that angers our respective nationalists.

And I agree with you about US credit. The US must defend its reputation and credit at all costs, or we will face decades of decline, like another deadbeat, Argentina. That said, if the US defaults, it will make the financial crisis of 2008 look like child's play, and no one will come out of it looking good.

I agree with you 100%. It's an interconnected world now, thus cooperation is the only real way forward.

Profit - that sounds like Capitalism !

@Chinese-Dragon & I are ardent Socialists; he may say that he isn't 'cause Mrs.Dragon is a Capitalist & you know how one has to follow the wife's line after marriage but in his heart he is !

I'm not actually a socialist.

I am a pragmatist, I only care about what works. Like Deng Xiaoping said, it doesn't matter if a cat is white or black, as long as it catches mice.

Market economies generally work, incidents of market failure (like monopolies) are easily fixed. State capitalism sometimes works in the early stages of development. Socialism sometimes works at the post-developed stage, though often not.

Some guy in another thread was telling me that the only good system was the Islamic economic system. Trust me, if it is proven to work better than others in a real world scenario, I'll be the first one to champion it, despite me being an Atheist.

What matters to me, is what works. I don't discriminate on any ideological basis.

 

[OCguy]

I'm not suggesting the USA default on its debt to China out of spite. I actually do not feel China is an adversary, I just don't understand some of the anti-US hate from some vocal Chinese posters.

In that regard, those who wish ill-will on the US economy certainly don't understand how badly it would hurt them as well.

China defaulted on its debt in the 1900s with the communist takeover, even though they admittedly owe the money under international law. The sky didn't fall.

 

[Armstrong]

I'm not actually a socialist.

I am a pragmatist, I only care about what works. Like Deng Xiaoping said, it doesn't matter if a cat is white or black, as long as it catches mice.

Market economies generally work, incidents of market failure (like monopolies) are easily fixed. State capitalism sometimes works in the early stages of development. Socialism sometimes works at the post-developed stage, though often not.

I'm all for Democratic Socialism myself !

I never really wrapped my mind around the idea that its okay to have a 1000 different brands of shampoo in the market when even a few good ones would get the trick done; I'm still trying to work out how those 'few good ones' could be determined - Perhaps through a performance matrix that, were they able to score in the top percentile on it, get to go tax-free & are rewarded with other incentives making the lesser efficacious brands even less competitive & hence causing them to exit the market...maybe even ensuring that every one of them is a JV between some Government entity & the Producer to ensure that cut-throat Capitalism doesn't end up skinning the end consumer alike because of a quasi monopoly forming !

I dunno....I still have to figure it out !

Some guy in another thread was telling me that the only good system was the Islamic economic system. Trust me, if it is proven to work better than others in a real world scenario, I'll be the first one to champion it, despite me being an Atheist.

What matters to me, is what works. I don't discriminate on any ideological basis.

Yeah that probably was more religion infused passion talking than sense; Islamic Economic System is yet to be seen....there are only the odd principles here & there such as 'zero-interest' or 'earnings through asset generation not making money off money' etc. but because of the intellectual ossification that happened in the Muslim world in the better part of the past few hundred years....a system has yet to evolve & the old ones are obsolete !

 

[LeveragedBuyout]

You know forgive me for saying thus & do apologize if its a bit callous 'cause it isn't my place to criticize but for a country that commands the kind of economic muscle that the US does I saw a lot of poverty there; I can't recall a single street in Chicago or NYC where I didn't see some homeless guy or gal asking for money !

I did't however see any in Washington or Buffalo (the Niagra area) for that matter !

Why not learn from the Scandinavians ? I know I'd want Pakistan to !

Good question. It's too complicated to explore in detail here, but I'll take a quick stab at it. There are two causes of homelessness:

1) mental illness (minority)
2) economic cause (majority)

For number 1, sorry to be a bit lazy, but see Homelessness and mental health - Wikipedia, the free encyclopedia For number 2, I will further subdivide it into two parts: intentional and unintentional homelessness. For intentional homelessness, economic incentives matter. When you reward something, you get more of it. When you pay people not to work (unemployment insurance, disability benefits, welfare), it's hard to get them to agree to take a low-paying job at Walmart and give up a steady income stream with no obligations. See Social Security Closes Offices As Demand Soars : NPR key paragraph:

More than 47 million people receive Social Security retirement benefits, nearly a 20 percent increase from a decade ago. About 11 million people receive Social Security disability benefits, a 38 percent increase from a decade ago.

No, there wasn't some apocalypse where millions of people were injured and thus became eligible to collect disability benefits. The Democrats relaxed the eligibility requirements, and millions took advantage--because they could.

For the unintentionally homeless, the key is a strong economy that generates jobs. Generating jobs would make people more self-reliant, and less dependent on government. They might look at their paycheck and see how much the government is confiscating from their earnings. In other words, it might make them think more about who they are voting for, and their policies. Critical thinking is anathema to the Democratic Party.

Say what you will about enlightened dictatorship, but when it works, it works.

 

[kankan326]

The $3.9 trillion reserves mainly play a chain role, which bonds US and China together. Too bad China has to buy a bud who doesn't like him at all. No more choice. After all we are less developed now.

 

[Chinese-Dragon]

I'm not suggesting the USA default on its debt to China out of spite. I actually do not feel China is an adversary, I just don't understand some of the anti-US hate from some vocal Chinese posters.

In that regard, those who wish ill-will on the US economy certainly don't understand how badly it would hurt them as well.

China defaulted on its debt in the 1900s with the communist takeover, even though they admittedly owe the money under international law. The sky didn't fall.

Quite a different situation though, right?

The PRC threw out the ROC, like the ROC threw out the Qing Dynasty. Why would they pay for the debts of the illegitimate and illegal government they threw out? It's not their debt, they never benefited from it, they never asked for it. In fact that money was likely used on weapons that were used against them.

Also, none of those entities was dependent on borrowing, the way that current world governments are. In fact, the PRC wasn't even recognized as a country for decades, due to America's support of the ROC.

You know forgive me for saying thus & do apologize if its a bit callous 'cause it isn't my place to criticize but for a country that commands the kind of economic muscle that the US does I saw a lot of poverty there; I can't recall a single street in Chicago or NYC where I didn't see some homeless guy or gal asking for money !

I did't however see any in Washington or Buffalo (the Niagra area) for that matter !

Why not learn from the Scandinavians ? I know I'd want Pakistan to !

There are lots of beggars in my city (Hong Kong) as well. And HK has long been considered "the freest economy in the world", with almost non-existent taxes and almost no government intervention.

You see cars worth millions of dollars each, parked all over the place, and beggars on the next road over.

That's just how the world is sometimes.

 

[BoXilai]

I'm not actually a socialist.

I am a pragmatist, I only care about what works. Like Deng Xiaoping said, it doesn't matter if a cat is white or black, as long as it catches mice.

I have the same political view with you. Socialism is so silly. "From each according to his ability, to each according to his need". It is absurd! The social order must be depends on intellect and diligence.

 

[Brainsucker]

Who? no Indonesian ever mention Japan as their master or invite them to make a military post in Indonesia, but i regard so many Chinese Indonesian propose to sell their countries to China

Really? LOL. No Indonesian think Japan as their master? Maybe you forget about our people who love to put Japanese cartoon character as their avatar in the forums, and protect Japan at all cost. I don't accuse them as traitor who want to sell our country. I just use them as the example of your baseless accusation; and call that as weird analogy.

And the funny thing is, after you accused Bangladesh people with baseless accusation; A country who has no problem politically with our country (And hurt their Nationalism feeling). and now you accuse Indonesian Chinese as a respond to my post. Very funny of you.

Wait... you re not one of those people who love to put their Japanese cartoon character as their avatar in the forum, are you?

 

[TaiShang]

I'm not suggesting the USA default on its debt to China out of spite. I actually do not feel China is an adversary, I just don't understand some of the anti-US hate from some vocal Chinese posters.

Not everyone is the same. This being the East Asian thread, it is normal for most Chinese to tend to post here. But there is very little irrational hatred to anybody from Chinese members' corner. Some US-flagged persons come here and use even more nationalist and hatred-ridden rhetoric. So, singling out Chinese as irrational nationalists is unfair. The best description would be Chinese patriots.

Criticizing the US and its policies is not a sin. China is being criticized on daily basis. Wishing China to take over the US is not nationalism; it is rationalism. Of course, like any human being that is normal, Chinese will strive to be the best -- and to be the best you need to overcome and supersede the existing "best."

I am not a big proponent of regular citizens to be too much involved in foreign policy. Domestic, fine; foreign, leave to the experts. But the anti-China hatred and xenophobia in US discussion forums is scary.

I would say, US produces some of the worst kind of internet commenters -- probably because they have no more important thing to do than commenting unanimously.

 

[Beidou2020]

Spend it all on military build up. I can't really see anything else to spend it on. We already have plenty of energy, metals, food, technology, etc.

 

[Sanchez]

I'm not suggesting the USA default on its debt to China out of spite. I actually do not feel China is an adversary, I just don't understand some of the anti-US hate from some vocal Chinese posters.

In that regard, those who wish ill-will on the US economy certainly don't understand how badly it would hurt them as well.

China defaulted on its debt in the 1900s with the communist takeover, even though they admittedly owe the money under international law. The sky didn't fall.

It was the nationalist government that defaulted the debt of Qing. And the nationalist government was recognized by US and allies till 1970s. They are still existing by theory.

 

[GreenFalcon]

More Gold!!!