Saturday, December 10, 2011

The Chinese Government's Investment in the United States.

Walter Russell Mead, at the American Interest, notes the following concerning China's financial reserves:
What’s well known is that China keeps about two thirds of its enormous monetary reserve in US dollars. What’s less well known is that China’s sovereign wealth fund, organized to diversify China’s portfolio into higher yielding assets, is also heavily invested in the US.

In fact, according this Bloomberg report, China currently has 60 percent of its global sovereign investment portfolio in US assets.
(Emphasis in original).

Mead goes on:
For all the tension and rivalry in the relationship, the US and China have a great many interests in common. We are joined at the hip.

Building and deepening these mutual dependencies is an important element of American foreign policy. We want China so bonded to us and to the international system that it will never do what Stalin, Hitler and Tojo tried and seek its destruction.
I've posted before that, counter-intuitive as it may be, nations with close ties are generally more likely to come into conflict because there is a greater potential for friction. Although China and the United States are heavily invested in each other, we are also in direct conflict for resources, access to important shipping lanes, and economic supremacy.

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