China Gets Tough

In a previous thread I mentioned signs of China’s “rapidly deteriorating economy, with trade volumes collapsing and a trend towards deflation, is fracturing Australia’s resources industry and support sectors,and increasing the chances of a local recession.”

It now seems that this is the stark reality we’ll have to come to terms with.

Chinese get tough: recession looms for Australia

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AUSTRALIA’S once-triumphant iron ore and coal miners face price cuts of between 30 and 50 per cent, which would slash export income by the equivalent of 4 per cent of gross domestic product and increase the likelihood of recession.

Secret annual iron ore contract negotiations are under way at Baosteel’s Shanghai steelworks and Rio Tinto and BHP Billiton are on the back foot for the first time in six years.

Zou Jian, a director of the China Iron & Steel Association and head of the China Metallurgical Mines Association, told the Herald that benchmark iron ore price cuts of between 30 and 50 per cent would be “reasonable” – on top of eliminating a large “freight premium” handed to Australian miners last year.

Australia’s coal negotiators face an even tougher battle because of their dependence on the crippled markets of Japan, South Korea and Taiwan.

Australia earned $31 billion from exporting iron ore last year and $46 billion from coal. “The lost export revenue from cutting iron ore prices by a third and coal prices by a half would be equivalent to 3.8 per cent of GDP,” said an ABN Amro economist, Kieran Davies.

Sources said the Federal Government had no intention of intervening.

What will this mean for government deficits and our ability to ride out the economic storm without suffering from a severe and prolonged downturn?

Over to you

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55 Responses

  1. For the second time in a century, America, bastion of right wing “free” market capitalism, wreaks economic havoc on the whole world.

    There’s no economic ideology in modern history that has brought so much harm and insecurity to so many in so many countries.

  2. Caney,

    What a moronic statement! Please enlighten me then on which economic system is completely secure and benign? Welcome to the reality of “globalization” mate! Ever heard of dominoes? Get some stones and stop blaming the poor decisions of your countrymen on others. Who is the more foolish, the idiot or those who follow the idiot?

  3. That’s very bad news. More bad news is that Australia’s largest trading partner, Japan (yes that’s right Japan is our largest trading partner!) has fallen into a severe recession (depression?) with their economy contracting over 3% in the 2008 December quarter alone!

    It would seem that a recession here in Australia is inevitable. Hopefully, it will be only a moderate one. That could be possible with the massive stimulus being applied by both the Reserve Bank of Australia and the Federal Government. And of course our banks are in better shape than in most countries, due to better lending practices and better regulation.

  4. Sparta

    I repeat. Right wing free market fundamentalism has brought more harm and insecurity to more people in more countries than any other economic ideology in modern history.

  5. Alastair

    “yes that’s right Japan is our largest trading partner!”

    Yes that’s right. And I’ve pointed out elsewhere another blow that could quite easily drag the global economy deeper into the quagmire. Including Australia, China and Japan have both relied heavily on American consumerism.

    In the last few years, Japan and China have bought more than $1.8 trillion worth of U.S. dollars. Why? To keep the value of the dollar high so the US can continue buying lots of their exports. What would the dollar be worth if they were not propping it up? What will it be worth when they can buy no more?

    Japan have gone to the wall and if China pulls it’s investment in Treasuries that spells MAJOR danger for the value of the $US

  6. Dude, the “unregulated” free market you speak of was hardly a right or left thing! I repeat, what system is secure and benign?

  7. Caney

    “Who is the more foolish, the idiot or those who follow the idiot?”

    We did get well and truly sucked in Caney. And now we have Joe Hockey ready to fight for the free market ideology that caused this mess.

  8. Have to agree with Caney here. The free market fundamentalism aspired to by the American government (i.e. regulation free) has caused more harm & financial insecurity worldwide than communism, socialism, or any other “-ism” I can think of.

    Where other economic models failed, they only caused “localised” grief whereas America’s push to globalise their version of free market capitalism has exported their failure to the rest of the world.

  9. John,

    You know better than that……..Stop playing devils advocate…….

  10. I can’t help but refer to Minsky:

    “To be exact leadership does not seem to be aware that the normal functioning of our economy leads to financial trauma and crises, inflation, currency depreciations, unemployment and poverty, in the midst of what could be virtual universal affluence. In short, financially complex capitalism is inherently flawed.”

    Hyman Minsky 1986

    “Over a a protracted period of good times, capitalist economies tend to move from a structure dominated by hedge finance units to a structure in which there is a large weight to units engaged in speculative and Ponzi financing”

    Hyman Minsky 1992

    Minsky would not attribute the crisis to “irrational exuberance” or manias or bubbles. Those who were caught up in the boom behaved rationally at least according to the model of the model they had developed
    to guide their behavior. That model included the prospective course of asset prices, future income, behavior of policymakers, and ability to hedge risks or shift them onto others. It is only in retrospect that we can see the
    boom for what it was: mass delusion propagated in part by policymakers and those with vested interests.

    However, a large part of the blame must be laid on the relative stability experienced over the past couple of decades “the tranquility that made the boom possible also created fragility because,according to Minsky, stability is destabilizing.

    The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.

    It think it is far too simple to attribute the current crisis to a speculative boom in real estate, to excessive monetaryease, or even to lax supervision. The causes are complex and have developed over a very long period.As such, solutions will also be multifaceted, tentative,and contingent upon continued evolution of the financial system, with an eye to longer-term trends that have made the system much more prone to crisis, in my opinion..

  11. John,

    You know better than that……..Stop playing devils advocate…….

    Who me? (wink)

  12. B. Tolputt,

    I just love this brave new world; nobody is responsible for their own actions…..Blame America, the laymen’s excuse for every ill in the world. Whatever helps you guys sleep at night…….

  13. We did get well and truly sucked in Caney. And now we have Joe Hockey ready to fight for the free market ideology that caused this mess.

    Yes Joe, good luck with trying to sell the message that the answer to our free market caused crisis is the free market!

  14. Sparta of Phoenix, AZ USA, on February 19th, 2009 at 11:58 am

    American exceptionalism, a sense of manifest destiny, dollar hegemony, the belief by Mr White that America would always be a creditor nation at Bretton Woods, a right of veto at the IMF which would have seen America selling off its assets and raising taxes to pay its way back into fiscal responsibility by now…take yer pick.

  15. Sparta

    “I just love this brave new world; nobody is responsible for their own actions…..Blame America, the laymen’s excuse for every ill in the world. Whatever helps you guys sleep at night…….”

    America is certainly at the centre, however, you’re right in a saying that passing the blame onto the US doesn’t addresses the responsibility of all the countries that gladly followed the US’s lead.

  16. B.Tolputt, on February 19th, 2009 at 11:52 am

    The free market fundamentalism aspired to by the American government (i.e. regulation free) has caused more harm & financial insecurity worldwide than communism, socialism, or any other “-ism” I can think of.

    Where other economic models failed, they only caused “localised” grief whereas America’s push to globalise their version of free market capitalism has exported their failure to the rest of the world.

    Brilliantly put, and spot on!

  17. Me think Sparta’s spoling for a fight (lol) Ok , go for it Spart’s.

  18. John McPhilbin, on February 19th, 2009 at 12:10 pm

    Well, really, John, I think he will get one if he insists on setting as the standard the taking of responsibility and claims that as a basis for not criticising America even as it continues banging on about ‘American interests’ in a global context.

  19. “B.Tolputt, on February 19th, 2009 at 11:52 am Said:
    Have to agree with Caney here. The free market fundamentalism aspired to by the American government (i.e. regulation free) has caused more harm & financial insecurity worldwide than communism, socialism, or any other “-ism” I can think of.

    Where other economic models failed, they only caused “localised” grief whereas America’s push to globalise their version of free market capitalism has exported their failure to the rest of the world.”

    That is close to the most ill-informed garbage I have read on a blog. Why don’t you pay a visit to some of these Communist countries and have a proper look.

  20. I’m wonder what Howard is trying to say?

    Rudd has stretched the facts: Howard
    http://www.theaustralian.news.com.au/story/0,25197,25075647-5013871,00.html

    JOHN Howard has accused Kevin Rudd of “stretching the facts” of the global financial crisis in an unsustainable economic argument to score “a base political point”.

    In his first response to the Prime Minister’s extended attack on extreme capitalism, Wall Street greed, neo-liberals, free marketeers and the Howard years, Mr Howard says the global crisis is not the result of a neo-liberal failure. “Our current predicament is not the result of some malign economic philosophy having held total sway for the past 30 years,” the former Liberal prime minister says in a speech to be delivered in Melbourne tonight.

    “We all face a very difficult economic climate. There will be legitimate differences in our responses, based on different philosophies. Nothing, however, will be achieved by stretching the facts to serve an unsustainable economic proposition, designed to score a base political point.”

  21. ….I think JWH is blaming the Yanks?

  22. John McPhilbin, on February 19th, 2009 at 12:21 pm

    Well, he definitely isn’t making any political point to (re-)capture base at all; just as Rudd wasn’t trying to blur ‘Liberal’ and ‘neo-liberal’ in popular perceptions (which, imho, is dangerous, given how that semantic experiment turned out in America, where the mere mention of the word ‘liberal’ has many foaming at the mouth despite their Republic being built on liberal democratic ideals).

  23. James of North Melbourne
    I have seen it, and it is horrifying. Want to know something else? Most “communist” countries are not practising “pure communism” and are, in fact, a mish-mash of communism, fascism, and capitalism.

    Look closely at where the product of the population’s labour tends to end up. Sold off to large multi-national corporations who have the power & money to target their “lobbying” (read: bribery) to people in power. Check out how the oil companies get nigh on perpetual licenses to export national resources for a pittance.

    This recession will also make things worse for these countries too, as what little money coming in from their exploitation will be decreased along with all other countries. So capitalism is making them worse whereas they have no negative affect on us. My argument stands

  24. “Most “communist” countries are not practising “pure communism” and are, in fact, a mish-mash of communism, fascism, and capitalism.”

    Here we go again, another “believer” that actually thinks that if it is “done this way” it will work. News flash genius, all communist regimes thought they had the “right version” and all have failed. Like you they all discount one fundamental aspect, human nature! Like you they can’t seem to distinguish theory from reality! In theory, capitalism is a perfect system as well predicated on the wants and needs of people but only if they live within their means and real “regulation”. When we start “creating” the illusion of wealth, a.k.a. “easy credit” and remove the regulation we circumvent the realities that would normally keep “humans”/ the system in check!

    “Look closely at where the product of the population’s labour tends to end up. Sold off to large multi-national corporations who have the power & money to target their “lobbying” (read: bribery) to people in power.”

    What are you on about? The end result is a rich tyrant that refuses to let go of power! The selling comes after the despotic regime collapses. People in power; boy you are young after all…….

    “So capitalism is making them worse whereas they have no negative affect on us.”

    Yes, losing one’s life under “red” rule should be compared to the plight of those who have lived beyond their means and are now finding it difficult to do so without the ease of credit. What another ridiculous statement.

    “My argument stands”

    You have no argument dude, try asking questions in class instead of sitting there passively like a lump!

  25. Here we go again, another “believer” that actually thinks that if it is “done this way” it will work.

    Uh, don’t know where you got that idea from buddy. I have no faith that communism will ever work, because it requires too much human control. For any economic system to work, it need to take into account the lengths to which human greed will affect an individual’s decisions. As there are always people with more control over the economic levers than others (in unregulated free markets, they are the banks/financial firms, multinational corporations, and cartels), this greed will always tip situations toward their benefit (over, say, the benefit of the general populace).

    I believe “well-regulated capitalism” with “socialist leaning” governments is the best mix of current economic “-ism”s. Human greed helps push people to better their lifestyle, the government’s socialist leaning ensures there is a safety net to catch the disadvantaged, and the regulations keep dishonest manipulators of markets/people from abusing the economic system that keeps everything running.

    It’s obvious, Sparta, that you are just gunning for a “right vs left” fight, but in doing so you are creating fantasy posts & arguments I have no interest in pursuing.

  26. Well said B Tolputt!

  27. B Tolputt, could you give us an example of a good socialist leaning government?

  28. Reb, the left/right war was started by our PM, with some VERY selective argument.

  29. Just wondering, which free market economy has entered this GFC with its financial system in the best shape……..according to the Deputy Prime Minister? Is it the “fundamentalist capitalist” one left by the “neo-liberals” Howard and Costello”? Or is it a more “socialist leaning” one, say France, Germany, or Great Britain?

  30. Sparta

    Exactly what is the difference between a tyrancial communist government owning everything and controling peoples lives , and a capitalist government allowing big business to buy up everything and own it all and control peoples lives.

    How about you look back in US history and check the history of the railway barrons and how they had total control of their employees including where they lived and how they lived, because the railway owned the towns and all the stores the emplyees had to live in and buy from. They knew exactly 100% everything about their employees including spending habits and saving habits and could keep them as surfs by ensuring their wage did not give them the freedom to leave their employer.

    Communism is not the only system on this planet that is man made and has skeletons that stink worse than cat shit in a car.

    Problem is most of the get rich quick schemes and funds in democratic countries were invented by US firms and exported around the world. More fool us for adopting them. Problem is our stupid aussie companies hired idiots from the US to run our companies with the ra ra crap included.

  31. Jame of North Melbourne

    And which staunchly free market economy capitalist country in the world is the biggest basket case. The USA

    For the 1000 time ( probably exagerating here a bit). The ONLY reason we are not as stuffed as the US and the UK is that we were three years behind in adopting their liberal lending policies, although they were well and truly on the way. I speak from experience, not ideology.

    There is NO other reason.

  32. James,

    It is the Libs who have taken Rudd’s essay to be applying to them when in fact it was looking at ‘neoliberalism’ more broadly and advocating a more socially responsible (or inclusive) form of capitalism. Rudd was simply making a academic contribution to political discourse which he had done earlier in 2006 in a speech in Sydney.

    The Liberals have taken Rudd’s essay personally and are trying to defend their legacy. The reality is that 90% of Aussies don’t give a toss and Labor hasn’t pushed the issue publically beyond the Rudd essay itself. All this discussion about this is from the media and Liberal Party and us political tragics. The Libs are working themselves into a lather pointing out all the virtues of free market capatilism which the bulk of people (rightly) think has contributed to this crisis. All the Libs (and what Howard will do ttonight in his speech) is align themselves with the problem. At least Rudd is talking about a solution and acting. While some of us think that the stimulus could be directed at more or different socially progressive activities (like pensioner housing 😉 ), the reality is that it is, overall, reasonably progressive in it’s targetting and most people see this as better than what the last Government did for most of its time in Government.

  33. All the Libs (and what Howard will do ttonight in his speech) is align themselves with the problem.

    should have read:
    All the Libs (and what Howard will do tonight in his speech) are doing is aligning themselves with the problem.

  34. Shane, according to Julia Gillard the other reason is that we are better regulated. Can I suggest a third reason? Our government never forced our banks to lend money to those who couldn’t afford it. I’m no advocate of staunch free market capitalism, I hate it. But I also hate the likes of Kevin Rudd and B Tolputt using this GFC as an excuse to advocate a shift to some form of socialism which will leave us all far worse off. There are certainly faulst in our system, not as many as in other countries but they are there. They will not be fixed whilst our nation’s leader uses this thing as an excuse to impose his idealogical bullshit on the nation, an ideology he denied prior to the election.

  35. We see the American ideology in Telstra.

    1) No we will NOT under any circumstances negotiate with our staff regarding pay rises.

    2) No we will NOT under any circumstances freeze management wages despite the fact our share price has plummeted and our reputation with the public for service is on the nose.

  36. James

    But I also hate the likes of Kevin Rudd and B Tolputt using this GFC as an excuse to advocate a shift to some form of socialism which will leave us all far worse off.

    I don’t think that’s what Rudd or B..T are suggesting at all and I challenge you to point out where either of them suggest such a thing – Rudd’s essay certainly doesn’t. Rather they are suggesting that more regard be had to Governments building social capital rather than simply relying on it to be delivered by the ‘free market’. And by social capital I mean better protections for pensioners and homeless, better health systems, better public education etc.

  37. James

    You are correct our government never forced our Banks to lend money to those who could not afford it.

    But our Banks introduced, Low Docs and No Docs, the loans of the future as stated by the americans. It was only a matter of time before Ninja loans would have been on our shores, even with no pushing from our government.

    So the phurphy that it was governments pressing banks to lend does not ring true when our own banks also waded into uncharted lending territory where a simple statement of I earn x dollrs got you a loan.
    Or I am self employed and I can afford the loan also got you a loan. Our Banks entered this market due to competition for other funders to maintain their market share which was being eroded by new entry financiers.

    Please tell me what socialist ideological bullshit legislation our prime minister has implemented since he was elected.

  38. Maybe we need a special “Sacked PM comes out of retirement” thread tomorrow to discuss how “honest” John is trying to salvage his reputation?

    Can some one overseas give him another award to keep him occupied?

  39. joni,

    That’s Dr “honest” John now thank you!

  40. B Tolputt has suggested a “socialist leaning government”, I asked him for an example and none has been forthcoming. Kevin Rudd’s essay is almost entirely a call for a major shift in economic policy to the left. In so far as Australia is concerned, no such shift is necessary. We are well regulated. We could be better regulated. Rudd did directly name the Coalition as being the I think natural home of neo-liberalism, he dishonestly neglected to mention the Hawke/Keating years. The truth is, in Australia, things are not that bad. When people talk of this crisis being the greatest ever, they display a remarkable lack of historical perspective. Tweak a couple of regulatory laws here, provide a few business incentives there, and we will be out of it in no time. Especially with a few positive words from our government. But no. This is the greatest financial crisis in modern times. We must spend everything we have, and more, on a stimulus package, but sorry, we will never be able to measure the benefits so we can’t tell you accurately whether it’s successful. But it’s ok, we’ll roll out a couple of “economists” to tell you that it worked. At the end of the day, the best way to get out of a debt created situation is to borrow more.

  41. Interesting. Link

    http://www.news.com.au/business/story/0,27753,25077841-31037,00.html

    If you have a GE Mortgage and refinance with Aussie your exit fee is waived. If you go anywhere else it will still apply. Condition of GE sale to Aussie.

    I think the ACCC needs to look at this and also the banking ombudsman as I believe this is a massive restriction on peoples rights to obtain a better deal forcing them to go to Aussie by coercion.

  42. James

    Our wealth creation over the last 15 years was built on borrowings and debt.

    All governments have used “economists” to peddle their agenda, not just the current one.

    What business incentives do you advocate ?

  43. Oh no, that’s right JWH is now Dr. John courtesy of an honorary doctorate in support of..well something.

  44. B Tolputt has suggested a “socialist leaning government”, I asked him for an example and none has been forthcoming.

    I fail to see how not answering your question in the one hour given (check the post timestamps) means I am using the GFC to advocate a push to socialism. Funnily enough, I have only just got to read the responses since my post just now because I was… *gasp* working. You know, the production of goods & services that makes an economy work (be it capitalist, socialist, whatever).

    If you want a look at successful (which is what I assume you mean by “good”) socialist leaning government – look no further than Denmark. Denmark, as the happiest country in the world, is technically a “social democracy” where a very high tax rate and many welfare programs (including, but not limited to, free healthcare, free childcare programs, and one of the largest percentages of adults on government salary/welfare for any democratic country). Sweden is another good example.

    I am not after pure socialism, just as I assume (hope) you are not advocating pure capitalism. However, the current financial crisis does show the failures of following a path of regulation removal when there are people out there who will abuse this. I’m pushing for us & our government to look at the social cost & benefits of their programs over the purity of any “ideal economic theory”

  45. B.Tolputt – “If you want a look at successful (which is what I assume you mean by “good”) socialist leaning government – look no further than Denmark.”

    Who’d want to live in Denmark? The cost of beer is $A8.55 a pint. Here it is $5.90. Mind you, Kazakhstan sounds very civilised at only $0.89.

    I say NO!! to the socialists that want to charge over $8 for our beer.

    It’s all here –

    http://www.pintprice.com/

  46. Michael West has come up with another humdinger.

    Don’t mention the debt
    http://business.smh.com.au/business/dont-mention-the-debt-20090219-8c6e.html
    Our overseas borrowing is the great unspoken. It is the one subject assiduously avoided in public by Kevin Rudd, Malcolm Turnbull, Ken Henry, APRA, the Reserve Bank and the big banks. They probably even gloss over the matter when chatting privately among themselves.

    It is Australia’s Ponzi scheme. Bernie Madoff goes to Bondi. We keep getting those foreign dollars in while sending plenty out, but never quite as much, hoping no one will blow the whistle lest the whole game end.

    Same deal in the US, though far more menacing.

    Our economy, like the US, UK and many in the developed world, is a chronic current account deficit nation, splashing year-in year-out on the national credit card and hoping the global bank keeps increasing the limit.

    What is the limit? We don’t know that, yet. Yet surely it must be tested one day.

  47. …we can’t continue to consume more than we are capable of producing, whilst relying on foreign banks to fund our addiction to credit. Somethings certainly got to give.

  48. Yep, Denmark, kicking ass in this GFC……

    http://www.iht.com/articles/2008/10/27/business/denmark.php

    And B, please forgive what you misinterpreted as me giving the hurry up for an answer. I well know that some are not always online. I was trying to tell Shane that I was trying to stick to a point, and didn’t want to shift from it.

  49. Dave55, on February 19th, 2009 at 3:18 pm

    Its honorary – can’t use the title

    …and don’t get me started on “honorary” degrees – they have to be earnt not given away – most people work bloody hard for the award…see you got me started! 👿

  50. Very interesting article.

    Deliver us from the ways of greed
    http://www.theaustralian.news.com.au/business/story/0,28124,25074739-14741,00.html
    Bernard Salt

    I AM reliably informed that in Alcoholics Anonymous meetings the first step is taking ownership of the problem.

    In other words there is no chance of sobriety until there is an admission that “I am an alcoholic”.

    The Catholic Church operates on a similar principle with regard to sinners. First you must confess and then repent your sins in order to have even half a chance of salvation. And what’s more, the penance paid is directly proportional to the scale of the sin. Small sins require less penance than big sins. (I sometimes wonder whether this scale needs to be reviewed, because some small transgressions today might be deemed “worth it”.)

    I think the alcoholics and the Catholics have something to teach the Australian consumer during these trying times.

    After a decade of access to easy credit and full employment, we have come to believe that we have a god-given right to spend regardless of the cost and regardless of the debt ultimately incurred. And in a rising employment market, who cares? Next year’s income will be greater than last year’s, so we can all handle just that little bit more debt.

    But now with an economic firestorm bearing down upon us, we are suddenly in a very different mood. “Please save us from our credit card debt and lead us not into temptation but deliver us along the path of righteousness and unto eternal solvency.”

  51. Yep, Denmark, kicking ass in this GFC……

    Yeah, they’re suffering… kinda like the rest of the world. On the other hand, reading that article shows them as being in a far superior position to the USA, Britain, and (in recent months) our own little part of the world. They’re hurting, but nowhere near as much as the rest of us.

    As to keeping the topic on track, I think my argument still stands. I never stated Denmark was immune to the GFC; it was in fact my point. When America exported it’s free market fundamentalism through both lobbying changes in foreign legislation (both directly and through negotiated trade agreements) and selling shoddy “financial derivatives” – they are causing hurt & insecurity world-wide. Even if Denmark’s socialist tendencies were a failure – they would only affect Denmark’s populace.

    Who’d want to live in Denmark? The cost of beer is $A8.55 a pint. Here it is $5.90. Mind you, Kazakhstan sounds very civilised at only $0.89.

    Good thing I don’t drink much beer then 🙂 On the other hand, all the European beers I’ve had were far superior to the poison known as Victorian Bitter. Speaking of horse piss, isn’t one of Kazakhstan’s brews made of goat’s urine?

  52. We oughta do what our friends in the Middle East do whenever the price of oil takes a dive: Scale-back production.

    This artificially forces the price-up.

  53. I dont know if its the right blog for it but i notice a lot of companies are trying to lock people in long term through contracts or debt.
    Are consumer goods about to hit a fall in price?

    or am i off the mark completely.

  54. From a previous comment: “In the last few years, Japan and China have bought more than $1.8 trillion worth of U.S. dollars. Why? To keep the value of the dollar high so the US can continue buying lots of their exports. What would the dollar be worth if they were not propping it up? What will it be worth when they can buy no more?

    Japan have gone to the wall and if China pulls it’s investment in Treasuries that spells MAJOR danger for the value of the $US”

    This shows just how important the China and Japan are to the US and maintaining the value of their dollar and the US know it.

    China still sure of US bonds: Clinton
    http://news.smh.com.au/breaking-news-business/china-still-sure-of-us-bonds-clinton-20090221-8e3z.html
    China is the top holder of US Treasury bills, with $US696.2 billion ($A1.08 trillion) of such securities in December followed by Japan with $US578.3 billion ($A899.2 billion), according to the latest official data from Washington.

    Continued Chinese investment is seen as essential to help the United States fund its $US787 billion stimulus package that US President Barack Obama signed into law last week”

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