a flood of activity into Canada's Oil Sands projects, and thus a massive increase in oil exports. Increased exports were raising the value of the Canadian dollar (which, importantly, is not pegged to any other currency). A higher Canadian dollar makes it harder for people from other countries to buy Canadian stuff: not just oil, but anything. And unlike with oil, our other industries didn't have a massive natural (read: Canada's really big ) competitive advantage. Which means that if our oil exports expand massively, it kills our manufacturing sector. The success of one industry, unrelated except by trading in the same currency, (1) can harm another industry. And that realization, to me, was a new and important one. Now, back to China. Their currency, in light of being pegged to the US currency, is essentially the same as the US currency. What does that mean? Success in exports in one sector (China manufacturing) can damage the market in another sector (US manufacturing) even if they manufacture totally different things, simply because the successful market artificially raises the prices of the unsuccessful market. Now, pegging your currency can be kind of expensive. China does it by stockpiling truckloads of US dollars. Well, more precisely, they buy US debt, which is essentially the same thing. What this really means is that China takes much of the profit from its exports and mails them back to the US (as "debt"), so that the US can afford to buy more Chinese stuff. In