Actually, according to the experts, if China stops buying $US or buys less, the $US will crumble.
According to the experts, instead of buying $US, China can use the excess cash for investing into healthcare and education sectors. As a result, healthcare and education sectors will generate more GDP growth in China, and therefore reduce the proportion of GDP growth from exports.
When that happens China does not need to care too much about the rising Chinese currency's effect on the exports.
China has around $800 BILLION worth of loan to the US. Any dramatic devaluation to the USD will cause significant losses to China. How much extra GDP would China need to generate in order to just balance that loss to USD devaluation?! Again, don't be stupid la.
It is in China's interest to gradually shift its foreign investment dependencies on the USD so that it wouldn't be as prone to USD fluctuations. It is also in the US' interest to let the USD devalue a bit (but not too much) to help itself with exports and to allow the debt to grow smaller in real terms.
In the foreseeable future, the USD is still the most dependable currency and investment shelter in the international market even though it is losing ground. As the economy recovers, however, investors are gonna withdrawl from investing in the currency and re-divert them to something real, and the USD will devalue a bit. As to how long this will take and what level it'll reach, I don't think any analyst will have a concrete idea.
China will only dump their $US gradually. So we are in agreement on this point.
But we should not under-estimate China investment in their healthcare and education system. As we all know, in US/Canada, the government spends 10-15% of GDP on health care. If China spends 15% of their GDP on healthcare, that is already a few hundred billion worth of GDP each year. Now, the $800 billion worth of US treasuries that China owns can easily be replaced over a number of years
發表於 2009-9-25 15:25
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