As a general proposition, it is somewhat obtuse to make strident demands on one’s biggest creditor without taking any consideration of the change in the power relationship that debtor status entails. It is astoundingly obtuse to make the demand that the Chinese stop buying dollars, at the same time as we depend on them continuing to buy dollars to finance our deficits. But demanding that they stop buying dollars is precisely what we have been doing for six years, every time we respond to trade concerns by demanding that they stop intervening to prevent the RMB from rising.
From Jeff Frankel's "Telling China to stop buying dollars now would be even more foolish than before".
[Source: KAL’s cartoon From The Economist print edition – Aug 9th 2007 – Illustration by Kevin Kallaugher
