The following article from freep.com gives a good explanation of how the economies of the US and China are connected. With President-elect Obama saying we are going to have to borrow hundreds of billions of dollars to stimulate the US economy, we need to ask, "Who is going to lend us that kind of money?" In the past, the Chinese have loaned us the money by purchasing US treasury notes. If they don't buy our paper, then who will? Read on, for the freep.com article. "China economic slowdown sparks U.S. concerns
It may have less to finance American spending, some say
BY TIM JOHNSON MCCLATCHY NEWSPAPERS |
BEIJING -- Nearly every day brings signs that China's blazing, export-driven economy is hitting the skids -- and that's mixed news to the United States.
China's slowdown has generated concerns that it may splash out less money to buy the piles of U.S. Treasury bonds that Washington must sell to finance trillion-dollar-a-year deficit spending.
Some economists say those fears may be overblown, however, and they point to other factors that could test China's resilience as millions of workers get thrown out of jobs, factories shut down, port activity slows and economic growth hits the doldrums for the first time in a generation.
In one of the most dramatic, but little-noticed, indications that manufacturing activity is slowing sharply, Taiwan announced last week that its exports to the mainland fell 54%. That signals a collapse in the supply pipeline of components that go into laptops, mobile phones and computer chips, which assembly plants in China pump out for the world market.
Shanghai, the once-throbbing hub at the Yangtze River Delta, saw an extraordinary double-digit decline in its industrial output last month, the China Daily reported Friday, citing an economic magazine, Caijing.