Monday 14 January 2008 The $1.4 Trillion Question

From the inbox:

This is a 5 page US-centric article by James Fallows that asks whether "The Chinese are subsidizing the American way of life. Are we playing them for suckers—or are they playing us?"

The article begins well with a description of the Blackstone saga and the belief among many Chinese that it is them who are subsiding the US with the Chinese government paying $3 billion for a 8% non-voting share of Blackstone. Since it lost $1 billion recently that deal is not looking so clever after all.

Take this quote and think how it sits compared to the usual press stories you ready about the US-China relationship:

Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes.

I would strongly advise reading this accessible article very carefully - it covers all the basics in manner that makes some difficult concepts easy to follow.

The $1.4 Trillion Question [The]

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