7 May 2009

China’s growing concerns over its assets in the US

The biggest surprise today was not the extra £50bn of Mervyn’s magic money to be created for the purposes of fertilising the embryonic green shoots spotted by stock market traders.

Forget Barclays’ remarkably strong results, and Lloyds’ further revelation of the devastation wrought upon its balance sheet by the purchase of HBoS.

The news of the day is actually in the US, where an auction of long-term government debt was very weakly received, spooking US stock markets. In and of itself it would not have been much of a problem. But yesterday, America’s biggest foreign lender, the Chinese, started to express concerns about lending to the US.

Premier Wen Jiabao said: “We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets. To speak truthfully, I do indeed have some worries.”

Today the Chinese government expressed concern about economic policies in the western world. The People’s Bank of China has said in its quarterly monetary policy report that money creation policies risk becoming backdoor devaluations. Is the “dim sum” beginning to unwind?

7 reader comments

  1. Tina Louise says:

    I had wondered about the US/China financial links and how they would be affected by the financial woes. So little has been mentioned and yet the finances of the US and China are tightly woven – there must come an impact?

    Thanks as always to 4 News for stirring the main news and digging out something otherwise forgotten.

  2. Justin says:

    This is the start of the next phase of the demise of America. Hold on….

  3. Kerrin says:

    The Chinese are not averse to using their economic power.

    They are right that especially the US and UK are stoking future inflation by the vast assumption of debt and printing of money. One of the invariable results of such policy has always been to alarm investors, who then demand higher returns through higher rates to compensate for the risk of weakening asset values.

    Why should this be a surprise this time?

  4. marooncap says:

    The Chinese SHOULD be worried, for America’s financial health is not getting better..its getting worse!! The Americans have already given the Chinese “Eminent Domain” over Land, Property and Infrastructure…meaning- if America forecloses on its debts to the Chinese, they can come in and control the physical assests!! Well done Hillary Clinton for brokering THAT DEAL!!
    As for the UK!!…
    Well i have already stated my case else where…

    11:54 pm on April 30, 2009 marooncap wrote:

    “Q:Where next for Britain’s uncertain economy?
    A: HYPERINFLATION aka SUPER HIGH INTREST RATES!!!! aka ZIMBABWE!!!
    Those printing presses at the Bank of England are nothing but a TICKING TIME BOMB!!! Stop them NOW!”

    …AND NOW WE SEE ANOTHER £50 Billion created from nothing flooding the British Economy!!?? I REST MY CASE!!
    Intrest rates at 20% this winter!! Pay off your debts now people!!!
    Go to eutruth.org.uk and Learn BEFORE its too late!!

  5. moneymouth77 says:

    With US banks needing so much more funding, I’d say the dim-sum was definitely… deep fried? Sorry I couldn’t resist ;)

    http://money.sky.com/mp/features/news/2009/05/08/US-banks-would-need-more-funds.html

  6. Dennis Junior says:

    Faisal:
    i am on the side of china regarding their concerns over the assets in the united
    states also…

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