On 8/9/07, Daniel Davies <[EMAIL PROTECTED]> wrote: > 1. To a very great extent, even if those T-Bills all went up in smoke > tomorrow, they would have served their main purpose, which was the > neutralisation of the domestic monetary consequences of a decade's > export-driven growth.
I agree completely on this. I have always thought that $1T in reserves, far from being an asset, is actually a big burden for China. They can't use it to get the assets that would actually benefit them, e.g. buying a high-tech company like Boeing or Intel - the US government would never permit that. The money just make China look like a big threat to the US and a bully to everyone else, and also severely limits its policy autonomy. The absolute best thing China can do with those reserves is to give it away to the indebted African countries. Not only would they be rid of an unwanted burden and increase global prosperity, but they'd also earn a tremendous amount of goodwill and prestige from it. Unfortunately the Chinese government also seems to think in classical economic terms - where such an act would be utterly "inefficient" and a "waste". So instead of giving it away they have to "invest" or to make "aid grants" instead, and basically become another colonial power. -raghu.
