Friday, August 10, 2007

China threatens to trigger US dollar crash

China is not alone asserting itself militarily it is also adopting a menacing tone towards the US in economic matters. It has threatened to use the nuclear option to trigger a US dollar crash. This is probably a bluff.

A US crash would cripple Chinese exports. The Chinese would do well to bear this in mind. A damaged US economy is a damaged Chinese economy. Both are inextricably linked. According to the Telegraph:
"The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US Treasury bonds if Washington imposes trade sanctions to force a yuan revaluation... "

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