Tuesday, August 07, 2007

China threatens 'nuclear option' of US dollar sales

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.

foreign control over 44pc of the US national debt had left America acutely vulnerable.

All I have to say about this is well what did you expect - you've been mortgaging yourself to the hilt for toys and lattes for too long and now someone has your nuts in a vice. A nice squeeze once in a while might make you consider the wisdom of your choices....but we'll see.


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