How Much Power Does China Wield Since It Owns So Much US Government Debt (Tax Payer Debt)?

It is quite astounding that in the modern western world, a tendency to borrow more and more money in an attempt to keep up repayments on domestic sovereign debt has to be pointed out by the nation that is in fact lending them the money. China back in August 2011 was sited as stating that they were not satisfied with the US Debt Deal. The Chinese are not happy and one of their credit rating agencies went ahead and downgraded America’s US treasury rating one week before S&P. China sees Washington’s debt problems as a “debt bomb” and have stated that it intends on diversifying its holding away from the dollar. In brief China has little sympathy for the way the American government is managing its debt crisis and that the debt deal they signed was just another quick fix that did not do anything to alter the States addiction to borrowing money.

The problem is that China wants America to keep spending but only on things that brings them in the dollars. However, as China now owns a large part of the US treasuries, it means they may also have quite a lot of say as to how Washington may spend in the future and the one thing they appear to be dead against is the US spending money on their military. This is hardly surprising when you look closely at just what is happening in the South China Sea or the Taiwan Straits. America may find itself in sticky waters. Although Washington does claim not to be influenced by what the Chinese may think or like them to do, this could however, be a matter for debate.

China is no longer the second cousin to America, in How to construct great arguments fact the reverse is true. In the last ten years the nation’s economy has outpaced Canada, Brazil and Germany to name but a few. China is today seen as an economic ‘powerhouse’ and the speed with which it is advancing and progressing is quite startling. China is expected to leave even Japan in its wake and is destined to become the second largest economy in the entire world just behind the US.