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To: pganini
I think you're missing something here.

China owns about $800 billion in US dollars, another $250-300 billion in US treasuries, so around $1 trillion.

GDP is a per year figure, and debt doesn't change much per year.

Chinese GDP for 2005 is 1.9 trillion US dollars.

Get it? They can pay it all back with US dollars, easily.

Yes, I agree with your analysis. In fact, Red China has already done exactly this type of cash transfusion to prop up its banks.

Were an ordinary developed nation in the PRC's position, I think it would be worse off since what we think of as ordinary central banking would not (in my opinion) do this type of propping.

My guess is that China is rich enough to afford this strategy: their profits last year in foreign trade well outweigh the amount of foreign reserve cash they used to bail out banks over the same period. And as you point out, the Chicoms have a lot more foreign reserves socked away.

I would like to see the U.S. cease all normal trade with China. We are only making this vicious totalitarian state stronger by flooding it with dollars.

31 posted on 01/12/2006 4:25:30 PM PST by snowsislander
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To: snowsislander

Eventually they'll get rid of all their state own banks and the private banks will not have this type of problem. And once that happens, i think a "collapse" is very unlikely.

What's more likely is that their own citizens will demand at least, rule of law. If you talk to the average Chinese, he isn't going to complain about of lack of democracy, he's going to bitch about lack of law and enforcement of it. He's going to complain about why certain officials gets preferential treatment under the law.

If they don't get the rule of law in place in the local level (village/city) either via some democratic reforms or judicial revamp, they'll be in serious trouble by 2010. Ironically it's going to be too much wealth that did them in.


39 posted on 01/13/2006 9:30:18 AM PST by pganini
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