Here’s one of those elusive reports from the Congressional Research Service, normally only available to the Congress. This one tabulates how much the US owed in China in Feb., 2009: $1,200,000,000,000 [this is not a misprint]. Since this was five times the 2003 figure, it might be just a bit more than that now, probably a cool trillion and a half dollars. The CRS report estimates that, counting China’s holdings of dollars themselves, the total was at least $1.5 trillion by June, 2009. But, hey, that’s only about $5000 for every man, woman, and child in the US.
The authors, Wayne Morrison and Marc Labonte, also analyze the risks to the US in owing so much money to the People’s Republic of China, which is not exactly a friend of ours. If they suddenly sold US bonds, it would cause their value, and the dollar, to plummet. This would reduce the value of the remaining ones held by China, but it would have a catastrophic effect on the US economy. It is already clear that a threat to do so gives China powerful leverage over US policies–just watch how US leaders behave in Beijing. Have a nice day, and Merry Christmas; you’re free to celebrate it any way you wish in the West.
R. D. Shelton