China macho about US dollar
Right now I’m wondering how the Chinese big wigs are feeling about the US bail-out of Fanny Mae and Freddie Mac.
The Chinese have a lot riding on the US economy. More than man others, in fact. It is of course a very significant market for so manyof its exports. As any dedicated shopper knows, it’s hard to find stuff in shops that isn’t made in China.
A dear friend of mine recently visited Shanghai on business to see some well-established suppliers. She thought it would be appropriate and pleasing to take small presents to her contacts. She did not wish to take trashy tourist unmemorabilia. But every prospect she looked at turned out to be ‘made in China’ (as was most of the unmemorabilia too).
Equally, China is heavily invested in formally ’safe’ US government and government-back securities. It’s reckoned there’s upwards of a trillion dollars invested by China in the US.
So a weak dollar is not in their interests. It makes there exports more expensive, and it devaluies their investments and holdings.
The Chinese muct therefor be just as macho about the dollar as the US authorities.
