Why China is still buying "In God We Trust" paper printed by Treasuries of the USA despite premier Wen Jia Bao critics the safety of their asset under USD.
1.No choice! Yes, no other nation is big enough to issue that kind of debt and of course not to mention serve the debt.
2.Federal Reserve is still the de facto world central bank which have the license to print money and recognised by almost 99% of the nations. By saying this, China can resale the debt to other nations by selling USD dominated debt. (It is unlikely since no other country has the financial muscle to do that). Noted that most of the super power economy nations are already owned the debt of "In God We Trust".
3. The "win-win" situation deal. USA to China:"(Tung Zhi).... You buy my debt, I buy your products" China export the products in exchange for the 'crazy' spending of Americans.
The situation is changing since China want to reduce the dependency solely to USA. But then again, you just can't ignore the country with the strongest purchasing power of 330++ millions population.
Indeed, China is still very much depend on the USA market. The world is entering the state of economy re balancing after the painful lesson caused by the USA. If the USA able to emerge again and learn from their mistake, can we still holding the slogan "In China We Trust!" or should we revert to "In God We Trust!" ...Have a deep thought!
