Chinese-owned US debt

{{uspolitics}}
'''China''' owns quite a bit of the '''United States debt'''. [[Sarah Palin|Some people]] view this as a problem. As in, any minute now [[China]] is going to call in that debt and Americans will be put to work as indentured servants, or they'll repossess [[New York]] or some such. It turns out this is not a realistic concern since the US is a rich developed nation, unlike Sri Lanka which had to cough up a port to China,<ref>Maria Abi-Habib, [https://www.nytimes.com/2018/06/25/world/asia/china-sri-lanka-port.html How China Got Sri Lanka to Cough Up a Port], New York Times 25 Jun. 2018</ref> but that hasn't stopped the likes of [[Ron Paul]] from banging on about [[Yellow Peril|Chinese occupying forces.]]<ref group=note>[https://www.youtube.com/watch?v=UryciFTWTP4 "What if the Chinese had military bases in America?"] {{reds}} In fairness, Ron & Rand can't even grasp that the Earth is [[Young earth creationism|older than 6000 years]], do you really think they're going to be able to understand money as debt?</ref>

==What kind of debt?==
That's a fine question. Does the US call up China once a year swearing they'll totally pay them back next year, and they just need a few hundred billion to get them over the hump? Or are they more like the loan sharks of the international community? Do Americans need kneecap protectors? Or, does China just buy a lot of US Treasury bonds?

Hint: it's the last one.

See, China sells a shit-ton of stuff to America (trust us on this one), way more than America sells to them. The US pays in [[dollar]]s, which one can't use directly in China, so they put the dollars to work by buying bonds and other such investments. The dollar is a really safe bet&nbsp;— the risk when investing in a country's currency is that it might be conquered or that its government might collapse, which aren't big concerns for the US with the world's [[MIC|most powerful military]] by a wide margin and a pretty stable government set-up, [[Tea Party]]-driven [[Fiscal cliff|shutdown antics]] notwithstanding. And China has to do something with all that foreign currency, so they might as well invest it in a low-risk device like T-Bills.<ref>[http://www.businessinsider.com/why-japan-and-china-buy-us-debt-2012-9 Why Japan and China buy US debt], ''Business Insider''</ref>

==What if they call it in?==
They can't do that; these are not {{wpl|puttable bond|puttable bonds|.}} Regular bonds pay out only when they mature and not a moment sooner. Granted, they do pay out, but not all at once. The US just has to pay them a chunk at a time per year, but even that isn't worth getting excited about. They're not obliged to pay in [[gold standard|gold]]; they just have to pay dollars (which they can print more of until [[inflation]]&nbsp;— which hit historic lows in 2015<ref>[http://www.economist.com/news/leaders/21589424-both-america-and-europe-central-bankers-should-be-pushing-prices-upwards-perils-falling The perils of falling inflation], ''The Economist''</ref>&nbsp;— sets in, if they need to).<ref>[http://www.uncommonwisdomdaily.com/why-sarah-palin-is-wrong-about-china-17451 Why Sarah Palin is Wrong About China]</ref> And if China did anything to weaken the dollar, they'd be sabotaging ''their own'' economy, since those dollars that the US is paying them would be worth less.<ref group=note>That's why China's calls for a "de-Americanized" world economy created headlines during the fiscal cliff; they're just [http://www.nytimes.com/2013/10/16/us/politics/china-rails-over-us-fiscal-crisis-seeing-its-own-money-at-risk.html?_r=0 scared of losing their own money.]</ref> The truth is, China is much more dependent on America than the other way around. 

It's essentially economic [[MAD]], but without the dark cloud of [[Cold War]] [[nuke]] stockpiling.

==What else?==
China owns only '''7%''' of US debt.<ref>[http://www.investopedia.com/articles/investing/080615/china-owns-us-debt-how-much.asp China Owns US Debt, but How Much?]</ref> Also, for every dollar of US debt owned by foreign countries, it owns 89 cents of foreign debt?<ref>[http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0 Nobody Understands Debt]</ref> Debt in this context is really something that just gets traded around like [[Pokémon]] cards. Yet another lesson on the need to ''for crying out loud'' stop thinking of state or international economics as though they work like individual or business economics. [[Economics#Macroeconomics and microeconomics|Macroeconomics does not work like microeconomics]].

[[File:Federal Government debt holders.webp|thumb|center|650px|US federal Government debt holders
{{legend|#929292|Domestic private investors}}
{{legend|#004D80|Federal Reserve Treasuries}}
{{legend|#00A2FF|Domestic intergovernmental holdings}}
{{legend|#B51700|Foreign}}
]]

==See also==
* [[Yellow Peril]]

==External links==
*[http://www.heritage.org/Research/Reports/2010/01/10-China-Myths-for-the-New-Decade 10 China Myths for the New Decade] (Derek Scissors, [[Heritage Foundation]] - quite the [[stopped clock]] moment for them)
*[http://www.youtube.com/watch?v=3ugDU2qNcyg Understanding the National Debt and Budget Deficit]
*[http://www.treasury.gov/press-center/press-releases/pages/tg1285.ASPX US-owned foreign debt] (2010)

==Notes==
{{reflist|group=note}}

==References==
{{reflist|2|80%}}

[[Category:Economics]]
[[Category:China]]

Categories: Economics, China