August 14th, 2011
02:00 PM ET

China's not doing us a favor

By Fareed Zakaria, CNN

What struck me this past week was China's reaction to our credit downgrade. Its state-run media thundered that America needed to "cure its addiction" to debt.

A Hong Kong newspaper widely read on the mainland ran a front page with a banner saying "The American Dream is Over."  It went on to report that Washington owes every single Chinese citizen 5,700 Yuan - about 900 U.S. dollars.

Another editorial said Washington's solution to its debt time bomb was to make the fuse one inch longer.

That kind of commentary has hit a nerve with the Chinese people. After a drop in Shanghai's stock market, bloggers took to local social media sites. One wrote: "The U.S. suffered a downgrade, why did we become the biggest victim?" Another said: "It was a huge mistake to buy U.S. bonds with Chinese taxpayer money. We must hold those who are involved responsible."

Here in the U.S. you hear many people worry that the Chinese government might stop buying American T-Bills. I think these fears are vastly overblown.

The economic situation between China and the U.S. is the financial version of mutually assured destruction - that cold war doctrine of nuclear deterrence. If you destroy me, I will destroy you.

Let me explain. I'll start with the facts. China is indeed America's biggest foreign lender - it owns about 1.2 trillion dollars of debt - more than Japan, the UK and Brazil.

A little-known fact is that most of America's debt - 14.3 trillion and counting - is owned by Americans in Social Security trusts, pension funds, and by the Federal Reserve.

But it is the marginal buyer that matters, so China is important. Imagine that China were to sell off those 1.2 trillion dollars of U.S. Treasury bonds. This is a huge hypothetical - but let's play out the disastrous chain of events that would happen if China began to divest.

It would trigger panic selling of the dollar. That would in turn hurt the U.S. economy, which is China's number one export market (not a good idea if you are the Beijing government trying to keep workers occupied in factories across China).

China is addicted to a strategy of export-led growth, which requires that it keep its goods cheap. This means keeping its currency undervalued. That's why it buys dollars.

But could China stop or slow down its new purchases of American debt? Yes, but even here, it has fewer options than people think. As China's export growth continues, it will keep adding to its foreign reserves of 3.2 trillion dollars. Where can it park that money? Does it want to invest in Japanese debt and make the Yen a reserve currency? Anyone who understands the deep animosity between China and Japan will see that this is unlikely.

Euro-denominated assets are a possibility - but there's really no such thing as European Treasury bonds. And even then, do you really want to put all your eggs in the euro when the future of the currency looks more shaky than ever before? Can you be confident that it will even be around 15 years from now?

As for British pounds and Swiss francs, you can buy those but just not in the vast quantities that China needs given the cash it generates.

And of course, if China were to stop buying Treasuries, the value of the Yuan would rise, Chinese exports would become more expensive and employment in China would fall.

So at the very moment China's bloggers and state-run media were blasting the U.S. government for its profligacy, guess what Beijing was doing?

It was buying U.S. Treasuries.

The reality is that China is trapped into a cycle of buying our T-bonds.  No matter what any ratings agency says, no other bond market is as big or as safe.

So ignore all those theories about China doing America a huge favor. The reality is, they have nowhere else to go. We're probably doing them a favor.

And by the way, in terms of who is paying whom, data from the Congressional Budget Office shows that the U.S. pays out some 74 million dollars to China in interest payments on debt every day. We did the math. That means Washington is paying Beijing 833 dollars every second.

For more of my thoughts through the week, I invite you to follow me on Facebook and Twitter and to bookmark the Global Public Square.

Post by:
Topics: China • Debt Crisis • Economy • From Fareed • GPS Show • United States • What in the World?

soundoff (729 Responses)
  1. That'snotTrue:[

    No, China isn't the one trapped, there are better investments than T bonds which are unlikely to be paid back such as gold, silver, oil and other various natural resources. However the US is trapped witth a growing debt, this article only blinds Americans to think that they're secure when they're not.
    &&& Author, why are you back on the China vs US topic again? The whole us vs them thing, other than the debt crisis...stil, there's the election coming up.......oh well, at least you're not as dillusional as the author that wrote What Will Bieoner whatever his name is will find in China.

    August 14, 2011 at 2:08 pm | Reply
    • That's not true either

      You're suggesting investments in silver? Do you even watch commodities? Silver's wildly variant, a young man's game if you will. It is not the place a government looks for low yield, secure returns when they are investing heavily to help keep the U.S. dollar out of their system to keep the yuan stable and undervalued. Purely ridiculous statement from someone who clearly knows very little about commodities trading, responsible fiscal policy, and currency "stabilization" methods.

      August 14, 2011 at 3:50 pm | Reply
      • blake

        Exactly what I was thinking. Well said.

        August 14, 2011 at 5:02 pm |
      • Brian

        Response to original poster: China is trapped and the author is absolutely spot on. The person holding the debt is always at a disadvantage. It goes with all things, your mortgage holder your unsecured credit holder(s) and so on. This works the same way on the international level. The person or nation holding the debt can simply not pay. Look what Mexico did in the 90's. They basically said we cant and are unable to pay. So what did its debtors do? They took it in the shorts, mainly the good old US of A. That would happen with China if the US said well we are not going to pay. China does not have any really good options on collecting its debt. They cant come on reposes anything. So they have to are stuck just as the author clearly pointed out.

        August 14, 2011 at 6:17 pm |
      • Destruk

        To Brian – China has hundreds of thousands of rockets and an Aircraft Carrier. They also have a sizable military foot on the ground force. China has 2.2 million on active duty compared to the USA's 1.5 million active duty. And they have 800,000 reserves compared to our 1.5 million reserves. They could pose a military thread to the USA if we decided not to pay them. They are also full members of the UN just like we are so they could move with their allies (mainly Russia) to impose sanctions on the USA due to our debt problems. They are not trapped as the author suggests, but their options are limited.

        August 14, 2011 at 7:04 pm |
      • john

        Not really. China could buy Gold, Silver, Platinum, Copper, Steel, Coal, Uranium, ships, airplanes, etc. I can also buy heavy machinary and make road construction a major job for its citizens, thus reduce unemployment...There are many options. The author simply repeats the old propagranda...

        August 14, 2011 at 9:43 pm |
      • Dan D


        China's Military has the numbers, but very little experience, especially when it comes to naval and air... They also import the majority of their gear from the US, Russia, and its allies. this is a well know fact. America would destroy China in a head to head war, China knows this, America knows this. The global repercussions would be dramatic and terrible, and no one has ever gone to war over debt. The only country that could hypothetically "take us out" in a one on one war is still Russia.

        August 14, 2011 at 9:45 pm |
      • Hypocrite


        You obviously know little about the chinese military machine.

        Sure they have an aircraft carrier that is just going into sea trials.

        Unfortunately for the Chinese navy, this ship is already two decades old, does not have the ability to land planes, and has no pilots who have ever landed on a carrier.

        Secondly, the Chinese may have numbers, but numbers mean little when you match up against a well trained and well armed force that has been fighting for the last decade.

        China and Russia combined couldn't put one foot on American soil no matter how hard they tried. The US navy is the strongest force in the world and would sink all the millions of troops you think china would throw at us.

        Until china develops it's navy, they pose no threat to the US or it's allies. Should they attempt to attack Taiwan the us backed Island would make the invasion so painful it would take years for the Chinese military to recover from the trip across the straits.

        August 14, 2011 at 9:53 pm |
      • Matt

        Please, in a non-nuclear confrontation the 7th fleet could probably single-handedly blockade China and defeat their Navy and Air Force. There's no way they'd go to war over debt. It would be them signing their own death warrant.

        August 14, 2011 at 9:57 pm |
      • D. Darko

        I have to agree with That's Not True Either; taking the massive amounts of currency that currently earn China acceptable yields in US treasuries, and transferring it all into commodities, would not work. China already plows a lot of its resources into commodities around the world. They are probably buying another mine in Africa as I write, and Australia makes a killing off of them. Maybe I'm wrong, but it seems that it's simply too much money to be going into those markets. It would be a tsunami that over inflates those markets. And that may very well cause industrial production costs to rise dramatically. It seems like that idea would damage economies.

        August 14, 2011 at 10:00 pm |
      • mark

        They are also full members of the UN just like we are so they could move with their allies (mainly Russia) to impose sanctions on the USA due to our debt problems."

        Are you dumb? You understand that for the U.N. to impose sanctions on the U.S. America would have to let them right? Wait no you dont because you dont know anything about which you speak but heres a little fyi for you America has veto power in the U.N. so nothing can be passed with out America saying ok 2 it.

        Also guess what china isnt part of? Nato which doesnt need permisson from China or Russia for sanctions.

        August 14, 2011 at 10:01 pm |
      • Seriously?

        Dang, i forgot to add what so many others have pointed out. When's the last time China was involved in a war? Any war? Even UN peace keeping missions? Besides murdering Tibetan monks or Uiyghur civilians of course. The last one I can think of is Korea, even if it was more recent, I very much doubt any Chinese infantry troops have any real combat experience. The war in Afghanistan alone has gone on for almost 10 years, not to mention the near constant deployment American troops have had over the past 50 years: Vietnam, Laos, Cambodia, Phillippines, Lebanon, pretty much all of South and Central America, Iraq, Bosnia, Somalia, Haiti, and "advisors" almost every where else.

        August 14, 2011 at 10:03 pm |
      • Hawk

        An ounce of silver is an ounce of silver, fiat valuation is meaningless!

        August 14, 2011 at 10:08 pm |
      • Justin

        To the person saying china would crush us in a war... What are you smoking? China is so under trained compared to the us. Not to mention, we would see them coming from quite a ways. IF, and its the biggest IF ever, China would to invade us due to debts, it would cause WW3, no questions asked.

        August 14, 2011 at 10:09 pm |
      • BJD0012

        @ Destruk

        The idea of China going to war with the US is absurd. First, people keep talking about their new carrier, which isn't new at all. They purchased an unfinished rust bucket carrier that the soviets abandoned and have spent the last 20-30 years trying to fix it up. And they have fixed it up really well, so they have ONE. The US has ELEVEN carriers in their fleet. And if you want to talk about airpower, they have a prototype stealth fighter. We have tons of F-22s and they are well past the prototype stage. We will be working on the next gen within the next decade. China has come a long way in the last 20-30 years, but they are still decades away from being on the same level, technology wise, as the US. But the biggest reason is even if the US stopped paying and China was thinking about war, you have the same problem the same problem the soviets had. You destroy the world. No one wins.

        August 14, 2011 at 10:10 pm |
      • mark

        Also I would like 2 point out that the Falcon Hypersonic Technology Vehicle 2 is a unmanned aircraft the fastest one ever built it can be ANYWHERE in the world in under a hour it was designed to fly at 20 times the speed of sound.

        You know what that really is? the fastest ICBM ever made before another country would even know to fire back we would of already hit them.

        Also look at the size of our navy, NOT active navy im saying full out navy. We have ghost fleets bigger then most countrys active fleets which not alot of people really know about..

        August 14, 2011 at 10:14 pm |
      • john

        If Jimmy Rogers is correct, commodity will continue moving up in the next 10-20 years. So buying commodity today may appear to be risky but may be less risky than owning US debt.

        August 14, 2011 at 10:28 pm |
      • Get it straight

        @ Seriously?

        China never murdered Tibetan monks or Uiyghur civilians.

        August 14, 2011 at 10:58 pm |
      • YoDude

        This isn't the age of one country winning a battle. those days are long gone. this is the age of "The Next World War Will Destroy Most Humans"

        August 14, 2011 at 10:59 pm |
      • YoDude

        do you know how much credibility we would lose if we can't pay our debts? think about it. we would go from a superpower to a complete joke.

        August 14, 2011 at 11:01 pm |
      • zzz

        China's military compared to the US is like comparing a matured industry to a growing one. However, in limited excursions in China's expanding sphere of influence, the US has failed in its strategic aims. In Korea, a fledgling PLA armed with only 19th century bolt-action rifles halted the heavily armed and trained Americans at the 38. In Vietnam, China provided most of the war supplies and provided over 400,000 in infantry, result: America retreated. As long as it's a war at a limited tactical level, US and China are about even

        August 14, 2011 at 11:26 pm |
      • DanIel

        It is a complete waste of time and anxiety to think that China would ever want to get into a war with the USA. The US is a world super power and there is literally no one who can compete on that level. Moreover, China and the USA have had a mutually beneficial relationship that has resulted into one of the largest trade partnerships in the world.

        The US media made such a huge fear mongering stink about some old re-furnished aircraft carrier that would never be able to compete with the US military. Google what other countries have aircraft carriers and whether there was ever any mention of these countries launching these ships. Some of these countries are in less stable parts of the world.

        China's launching of this aircraft carrier is more to exert an image of a rising country that can defend it's interested around it's own territory. It's stupid to think the Chinese have any interest in ever attacking the US. China has never been colonial in it's history.

        Instead of wasting time concerned about the "threat" of China, we should be worried about how we are going to educate our workers and children, and improve out education system so that we can compete globally. Tariffs and banning Chinese products are not a realistic strategy. Zakaria is pretty one dimensional and is acting like nothing more than CNN's version of Glenn Beck. Scare the crap out of everyone that the Chinese are coming when it's internal problems that have to be addressed if we are to improve the living standards of our children's future.

        August 14, 2011 at 11:37 pm |
      • Scott

        What everyone fails to realize is the fact that the Chinese have already landed. With the FTZ's and the ability to bring in unlimited amounts of MEN and CONTAINERS, they don't need to storm the beaches and get past our navy.

        Besides, the same "Chosen" people control both China AND the USA, so this is all one big game they are playing, with the clear intent of leading us into yet another Jew war.

        August 15, 2011 at 12:32 am |
      • Steven H.

        China, coming to a neighborhood near you...

        August 15, 2011 at 12:39 am |
      • Dose of reality

        the "that's not true:[" guy is a Chinese propagandist. They always come on here and try to spin things their way, AND pretend to be American or otherwise neutral to the discussion. The article laid out the facts.

        Anyone with a brain knows that China doesn't do anyone favors. In fact, with their currency manipulation they are deliberately screwing over the rest of the world to catch up. Because they are too lazy to get there on their own.

        August 15, 2011 at 12:45 am |
      • R Raine

        While they may not have the means or wherewithall to oppose the U.S. militarily, you neglected to mention the possibilities through chemical warfare. China is the biggest exporter of goods to the United States and as such, you must take into consideration the posibility of the plastics used for baby toys, childrens toys, animal toys, pet foods, etc. I promise you, if China was going to pursue retaliation for inability to pay back the debt in a timely manner, we needn't be concerned about nuclear warfare, we need to pay attention to the imports in which we buy on a daily basis.

        August 15, 2011 at 12:52 am |
      • Racists Smell

        @Scott-Hey, leave your skinhead dogma in your grandmother's basement, you racist tard.

        August 15, 2011 at 1:47 am |
      • Hennie

        Hi There. Only one way for America and China out of this and it is for Americans (And for that matter Europeans) to get off their backsides and restart productions and selling stuff and services to the Chinese. If not unemployment will continue to rise and the ressession will continue. A one way street will not work in the long run. Surely America is still the leader in many aspects. Use it or loose it.

        August 15, 2011 at 1:57 am |
      • tim

        @Destruk: Yeah, ifj you want to consider destruction and death an option...sheesh.

        August 15, 2011 at 5:22 am |
      • pole

        Yeh... i live in Poland... there was a time (long before WWII) when we lost our independance for 123 years... you know how? not becouse we lost a battle or war... but becouse we had a huge crisis in our country, we couldn't summon and eqiup our armies. As for now – your army is the best... but soon YOU WILL HAVE NO MONEY TO MANTAIN YOUR ARMY BECOUSE OF YOUR DEBT! Deal with that and do something! dont pretend evrything is still OK when your rating is droping down, and will drop down again if you wont reduce your debt. 20 years from now and US will fall if you will keep saying 'yeh we owe china trilions of dollars but so what they cant do anything'. America! Plz do something with your debt! i dont want chineese global domination!

        August 15, 2011 at 6:19 am |
      • jonathan

        What you guys fail to realize is that China could very well indeed attack the usa and conquer us easily by dumping 100 million naked Chinese women on our shores....up to our necks in illegals we would surrender without any level of resistance .. 🙂

        August 15, 2011 at 12:29 pm |
      • Dan

        If you owe the bank $100,000, the bank owns you. If you owe the bank $1,000,000,000, you own the bank.

        August 15, 2011 at 4:02 pm |
      • Is that so?

        I am amused by the military talk, China simply doesnt have the capabilities to attack the U.S. Under lack of blue water navy in the dictionary, it says see China. That aside this whole situation is a bloody mess and has no clear cut solution. If the U.S congress continues to get nothing done then we're not going to be able to pay off any debt and our economy will collapse which will in turn drag China with it since they will lose a massive amount of exports. However, this crisis will end, not for a long time perhaps, but it will end and we just need to weather the storm as best we can and try to blunt the worst of, depending on if the government can do that of course.

        August 15, 2011 at 5:33 pm |
      • Peter

        No one will win in a war, so lets not wasting time talking about it. On a global market economy, everyone is inter-dependent. Complaining or not, they will work it out.

        August 15, 2011 at 11:53 pm |
    • Dave

      Commodities don't have the liquidity of bonds. They really aren't that good an option for China's purposes. As usual Zakaria has hit the nail square on the head.

      August 14, 2011 at 3:58 pm | Reply
      • Brian

        Fareed is probably the best investigative journalist on the air right now. Hands down. He deals in facts and doesn't spin stories. He is a breath of fresh air, while other are full of hot air.

        August 14, 2011 at 10:41 pm |
      • YoDude

        you clearly don't read a lot, or engage in critical thinking

        August 14, 2011 at 11:14 pm |
      • TSIndiana

        David, You obviously have not watched scrap steel, copper and other metal prices as well as their primary sources. China is using their treasuries to purchase them and they are in enough of a rush that prices are record high. They have already got the low hanging fruit and are reaching much higher now.

        Perhaps you haven't had a thief stealing your metals but I have. When they are gone and the prices are double or 10X, then you may relalise that the US capacity (reserves) are severely depleated. Not only will we NOT have the production, we will NOT have reserves of steel or the ability to even get the base metals, China will have purchased the sources.

        In my community J(e)ws control the scrap markets. This local person is greedy and has a reputation for taking in stolen property. I found 1/2 of my stolen stuff there, the rest had been "processed" he said His business is growing rapidly taking scrap and sellling it to China. And he has $200K motorhome, new trucks, purchasing buildings for the scrap steeel, new this and that (all high price) in a storage building that I pass every day. I cringe when I see the "Christian and Jaw Alliance" showing pictures of poor Jaws and asking for donations to help them.

        About two weeks ago I tried to buy electrical scrap from a a building being destroyed by his business. I offered about 4X the steel scrap but that was not enough, he wanted 10X. Every time I drive by his storage building and the door is open, I think what a greedy basterd he is. China is making him rich and law enforcement does nothing to stop him from fencing stolen property. He has a "friend" in the Prosecutor and Judge.

        I'm for masssive TAX on exports of scrap metals, especially copper and stainless. Stop this bleading of metals because when it's gone...IT"S GONE and we clearly cannot be secure if we have depleated our metal stocks. Tax the Hel out of scrap leaving the US, and do it TODAY!

        August 15, 2011 at 7:42 am |
    • Netr0

      Actually if you were knowledgeable of the world. You would know about 'supply and demand'. Countries rarely sell off their precious metal reserves. Just look towards greece for an example of this, they are in the midst of an economical collapse and still they have yet to sell off their gold reserves. So there is no way for China to stockpile those precious metals and is far more efficent to just buy tbills.

      August 14, 2011 at 4:07 pm | Reply
      • TSIndiana

        Netro, You have obviously not watched scrap metals, steel, copper, stainless, etc. China is purchasing them and we are depleating our reserves. Economies operate more on these metals than gold or silver. They are purchasing both scrap and the mines at record levels. In the things we use every day, there is little if any gold or silver but there certainly is steel, copper and nichel (in stainless steel). They don't want our gold, they want the metals we use in our daily lives and for military. Every car and a lot of buildings have steel, every house and electric utility use copper and every restaurant has stainless steel food prep areas (not to mention the food and drug product companies).

        TAX exports of these metals befor the local thief sells them to the scrap dealer, who is getting rich selling them to China. DO IT TODAY.

        As a side note, multiply out about 8,500 tons of gold in our reserves bringing it to ounces. Then multiply that times $2,000 (rounding up the current price). It's am amazingly small number, compared to our debt.

        August 15, 2011 at 8:01 am |
    • freedom

      l thought it was a good show, he had some interesting panel that commented on some key questions.
      If you ask me, l think it's a good way start a debate. if it is true that "Washington owes every single Chinese citizen 5,700 Yuan – about 900 U.S. dollars." we need to find a way to pay back what we owe and fix this debt crisis that you calling it. after all this show is called GPS. We created this mess and l am confident we can fix it.
      Great job Fareed Zakaria. you can count on me to buy your products..
      That'snotTrue: what will be your solution to fixing this crisis?

      August 14, 2011 at 4:19 pm | Reply
      • j. von hettlingen

        It's a love-hate relationship. The Chinese and the Americans have to grin and bear it, whether they like it or not!

        August 14, 2011 at 5:11 pm |
    • edvhou812

      Gold is a bubble that will explode, not pop. Not a wise long-term investment.

      August 14, 2011 at 4:27 pm | Reply
      • TakeNoPrisoners

        Not a wise long-term investment?? have you gone goofy? sept 2001 gold was $255 an ounce and has gone up ten yours straight to now nearly $1800 an ounce?? try to watch gold and silver for the last ten years. I deal in rare coins and precious metals and just bought a new porsche and going to buy a lambo when it comes in, in 2 months. Invest in the greenbacks and tell me in 2 years how you are doing. lol

        August 14, 2011 at 5:00 pm |
      • edvhou812

        @TakeNoPrisoners: Lots of things have exploded in value over a 10 year period, only to drop like a rock later on. There are plenty of historical examples. I wish you luck if you think things will continue, because you will need it.

        August 14, 2011 at 5:20 pm |
      • stan

        takenoprisoners – it's easy to make something look good when you cherry pick your data... tell me how well gold did if you bought in '80 and held onto it. even at todays record prices you would still be under water some 40% after inflation. you sound like a '05 house flipper. hope your mortgage is paid off....

        August 14, 2011 at 6:35 pm |
      • Steven

        People forget that gold bugs have gotten smashed in the past. They get too emotional over it and forget it is just a commodity. It may go up more, but I can promise you it will also drop, and once it starts dropping, people will get hurt.

        August 14, 2011 at 11:09 pm |
      • syq

        The author seems to take lengding for granted. Why U.S. count others to pay for u? Why U.S. can't develop own economy better? A narcissist narcissist!

        August 15, 2011 at 2:36 am |
      • Tia

        @TakeNoPrisoners - I suppose you were completely surprised when the housing bubble burst and all the people that had bought homes as an investment lost everything. The same thing will happen to you. Eventually people are going to have to sell their gold because you can't walk into the store or your utility company and pay in gold. If you're counting solely on your little gold buying business then you're naive and will deserve to be laughed at when gold drops back down to $200-400 an ounce.

        August 15, 2011 at 5:59 am |
      • GoldIsForever

        Gold always will have value. It was around 200-400$ just because people thought economy is very strong. But it is not the reality. You dont know how many dollars fed print in 2008 and still keep printing. Coming to housing market, people bought homes when they cannot afford it. And moreover houses are liabilities rather than investment. But people buy gold only if they have useless dollars. they dont take mortgages to buy gold.

        August 15, 2011 at 10:18 am |
      • ready5bird

        Gold is a commoditiy and if one pays attention the majority of the rise in perceived value is against the dollar which has dropped over 50% in the last few is a bubble that will make the real estate bubble look small when it blows...anyone buying gold against dollars today for long term it going to lose!. $A is a commodity strong currency and it has risen leaps and bounds against the in terms of $A still up but no where near as against the dollar...on the technical side still some upside room...but not much longer

        August 16, 2011 at 3:05 pm |
    • chris

      This author is short sighted. He seems not understand the basic economics. Look at the logic, borrow money is doing lender a favor and the more the merrier. The problem is if the lender stop lending, it may suffer some loss of earning but US suffer loss of life.

      August 14, 2011 at 4:28 pm | Reply
      • sannish

        I will tell my credit card company what the author is telling us. Lets see what they have to say!

        August 14, 2011 at 5:06 pm |
      • j. von hettlingen

        "The problem is if the lender stop lending, it may suffer some loss of earning but US suffer loss of life."
        The Chinese will also lose the $1,4 trillion, if the U.S. is completely broke.

        August 14, 2011 at 5:16 pm |
      • Kumar

        @j. von hettlingen: "The Chinese will also lose the $1,4 trillion, if the U.S. is completely broke."

        In this case China will buy Alaska and few other cash rich states for 1.4 trillion and will not mind buying the rest of the country for pennies like US bought Alaska from Russia

        August 14, 2011 at 5:55 pm |
      • hmbsandman

        Fareed's logic is the following:
        1. US buys things from China, pays them in dollars.
        2. China can only do two things with USD:
        a. Buy T-bills, or invest in the US.
        b. Buy oil.
        BTW, in addition to T-bills, they're buying up a lot of companies in the US, they're buying real estate in NYC etc as well. So one should change T-bills to any US assets.
        3. However if US goes broke, then China loses:
        a. Their investment
        b. Their market.

        The flaw in this argument is that Fareed assumes US is the only game in town. Its true T-bills are the most liquid, least-dumb investment to make. But there are other markets China can go after. It may take a little longer, but consumer markets are developing all over the planet.

        All this means we need to get the debt crisis fixed ASAP so we can get back on track.

        It was very disappointing, and I guess a sign of the times, that neither Krugman nor Rogoff could agree on what needed to be done.

        August 14, 2011 at 7:23 pm |
    • Ben

      Zakaria is correct that China is really backed into a corner by running consistent trade surpluses. That surplus causes their currency to appreciate, and the Chinese have to flood the market with Yuan (i.e. trade them for other currencies) to counteract this force. Unfortunately, no market other than US debt is deep enough for the volume of purchasing China must conduct. We really do have them in a tight spot, and it would be even tighter if we could resolve our budgetary issues and stop lending to them. What would they do then?

      August 14, 2011 at 4:44 pm | Reply
      • USA

        "Zakaria is correct that China is really backed into a corner by running consistent trade surpluses."
        From what witness in China, the changes in the last 20 yrs, it surely is a fantatic corner China is backed into.

        August 14, 2011 at 6:33 pm |
      • USA

        "So ignore all those theories about China doing America a huge favor. The reality is, they have nowhere else to go. We're probably doing them a favor."
        While we sat on our lazy ass borrowing anyway we can, the Chinese have ran the race from the very last to the very front, moving great wealth and brains to their doorstep. I beg Fareed please also do us a huge favor: This article do us no bloody good, please withdraw.

        August 14, 2011 at 6:48 pm |
      • Hawk

        Youi are not serious are you???

        August 14, 2011 at 9:55 pm |
    • Rexa

      The numbers don't lie. Our government's biggest debt is the government itself as the author pointed out and that is a good thing but of course China is our second biggest borrower and you can look that up anywhere. We also employ all of China and if it weren't for the US, China would be nothing. They are scared at going down with us but reality is nothing is going to happen to China as long as there is always demand for Chinese-made products. We will never stop buying Chinese products because if we did, then everything we consume/purchase on a daily basis would cost much much more. You have to also remember that China exploits and manipulates their currency to make it stay weak. Any normal citizen of a country would want their own currency to be strong why does China not want the same thing? Have you asked yourself that? So in the process they are the ones who are hurting their own citizens. Look at the conditions that Chinese workers work in. That's thanks to China's own government.

      August 14, 2011 at 5:09 pm | Reply
      • ann

        For myself, I would rather have fewer things, but with more quality. I would rather quit buying from China, and bring back American, quality products, not the lower quality Chinese products(to all of you who keep berating America). That in turn may bring the jobs home. The government needs to have a plan to return jobs to America(to those who praise China and blast the US, how do you think China has started becoming middle class? Many US companies are there giving them jobs)I think the people should start complaining and bring American companies back home, even though its cheaper labor in China-wheres your patriotism?Your country needs those jobs, find a way to bring them back so you can earn enough satisfaction, is that so difficult or are ALL businesses too greedy and need to be boycotted by Americans who take their jobs overseas?I dont have any solutions, thats not my area of expertise, but I know there are plenty of intelligent, innovative Americans out there who are quite capable of creating jobs for people, thats what Americans are all about. We dont give up and we come back stronger. I call on BIG BUSINESS and CORPORATION and those with mpney in their pocket to make a differnce here since politicians can't.I dont like to berate people, but its a fact that China and a few others STEAL ideas(even making copies of original cities in other countries) . Shame on those who sing their praises , then blast the US who has helped many countries rise to midle class by exporting our jobs or importing their goods. Americans need to start looking out for themselves and insist that jobs stay here. I dont care if its cheaper to build something in another country rather than ship it, the government needs to help find ways to ship them cheaper, rather than building factories with our technology elsewhere.We help others and it only hurts us and allows us criticism from those who dont know who helped in the first place.And those businesses and corporations know who they are. We in fact helped India with our technical jobs and one company is bringing the jobs back home and I applaud that move. Our voices need to ring louder in this regard. I used to enjoy helping other countries, but there is no appreciation for it, all we hear are the negatives from the world because no one knows the reality. For those that wrote these articles, you should know, we are a resilent people, and when we are attacked verbally by people we have helped, we know its time to stop helping you. Now, if we can get the government to start listening up, because face it people, you work for we the people, and we need to make sure you get a pay cut because youre not doing well in job performance. We would all be fired by now!

        August 14, 2011 at 6:08 pm |
      • ann

        Oh and btw,I feel the government should listen to Fareed and others who offer ideas, maybe you will learn something!

        August 14, 2011 at 6:12 pm |
      • USA

        "Look at the conditions that Chinese workers work in. That's thanks to China's own government."
        From the Chinese citizen' approval rating of the Chinese government and millions migrant workers from the villages, we need to ask "Is the workers condition really that bad as we heard?"

        August 14, 2011 at 6:59 pm |
      • AdnanKhan

        China is just playing the waiting game. Once there are strong consumer markets that have a powerful currency, China can ship large volumes of goods to non-US markets.

        Making all products back in America is un-realistic, US workers need to be payed far too much to justify manufacturing small goods here, that is why the only US manufacturing jobs are in high tech/high value goods. We need to look to invest in Mexico and turn it into our China for manufacturing. This will do so many things: bolster Mexico's economy, discourage illegal immigration because jobs would be there, reduce influence of cartels which prosper in poverty. The biggest thing is that we will save on transport. It is a lot more economical to build more cargo train lines to mexico than to ship in goods from China.

        August 14, 2011 at 10:28 pm |
      • Bill

        Chinese women workers(50-70 hrs per week), have a lower standard of living than our "welfare moms" who never work. We are borrowing money produced by these Chinese workers to finance welfare moms. Let's readdress what we are doing with our social programs when we proclaim to help the "poor".

        August 14, 2011 at 11:28 pm |
      • isbabo

        a couple of thoughts/questions:

        China is one of the few countries in the world that has multiple currencies. The Chinese can keep their own currency artificially low, as has been discussed at length above, for the purposes of export but still purchase globally with the Hong Kong dollar, which is one of the most traded and reputable currencies in the world (and the Macanese pataca, but I can't see that being used). I'm not actually sure how big a factor this is, but it would seem to be a considerable advantage.

        Also, unlike the yuan renminbi, the HK dollar is globally traded. HK still counts for a full fifth of the Chinese economy (depending on how that's measured). What are the odds that the US and others haven't already loaded up on HK's equivalent of t-bills?

        August 15, 2011 at 2:43 am |
    • Henkv

      If the world economy collapses (lets not discuss if vs. when), there won't be anyone willing or able to pay $1800 for the ounce of the gold you just bought. And guess what? The gold bubble, just like internet stock, Enron stock, housing, mortgages, and everything else that is purely made up of air, will burst.
      OK, who is ready for the next bubble? I have some great land in Florida for you.

      August 14, 2011 at 5:49 pm | Reply
    • letushelp

      So this traitor Zakaria wishes to exchange US collapse for 1.3 trillion, only? I bet not only Chinese but also Euros will be more than happy to do so.

      August 14, 2011 at 6:00 pm | Reply
      • D. Darko

        "So this traitor Zakaria wishes to exchange US collapse for 1.3 trillion, only? I bet not only Chinese but also Euros will be more than happy to do so."

        First off, why is he a traitor? He analyses a situation, and he's a traitor. If you say so, but to say that he wishes to exchange US collapse for $1.3 trillion "only" makes no sense whatsoever. What Zakaria was doing was simply giving the reader context – it's a whole lot of money that can't go elsewhere for the various reasons he explained. And even if the US were to "collapse", I'm pretty confident that both China and Europe (and the rest of the world) would not be happy.

        There's no zero sum "exchange" here. The US and China are stuck with what we've got, because there's a hell of a lot more downside to turning the boat in a different direction, than leaving it on course. Think before your type.

        August 14, 2011 at 10:39 pm |
    • Scott

      Simple Outline:

      -The Jews print money at will (giving them all the power to do with as they please).

      -With that money, they purchased (stole) the entire American manufacturing industry (we create, they corrupt & destroy).

      -Then, they moved it all to China (this all happened right under our noses in a relatively short span of time, yet very few are able to recognize the obvious, even to this day).

      -All the while, they tax us into slavery, and sell us back OUR goods that are now laced with lead and other toxic substances (think that was a coincidence/accident or the fault of the Chinese slaves on the other end?). Yes, this is just another way the Jews have poisoned us (and our children).

      -In the meantime, they stole OUR technologies (all they do in China is reproduce everything we invent, discover, and create), our military secrets, and fund the very RED army they will eventually use to strike the final blow in our coffin justified by our false "debt" to them. Do you "think" they are arming them for "nothing", and convincing the Chinese that we "owe" them for "no reason"? Will you still "believe" that as the RED Chinese army is marching down your street?

      And on the back end of all of this, they have most of the American sheeple convinced that we somehow "owe" the Chinese, as they have engaged in a relentless propaganda campaign in China as well to convince them of the same ridiculous lie.

      Wow.. What a scam these Jews have pulled off. Robbing us blind, destroying our economy, stripping our entire manufacturing industry down to the bones, and convincing the Chinese that we are in "debt" to them (of course the Jews have complete control over China, so all that "debt" they created on this end, goes right to them on the other...screwing us both coming and going)

      Unless of course you "think" this was all a "coincidence" and "believe" that the Chinese somehow out smarted us, swooped in and stole everything on their own, and beat us at our own game...To point out the obvious: these are OUR inventions and OUR technologies, nothing originally "Chinese" about ANY of "their" products or weaponry.. especially that Chinese warship in the 1st post of this thread (what would they threaten us with if not armed with OUR military "secrets".. bows and arrows?).

      Again, they are using OUR technologies against us... to include, in the not too distant future, the military technologies that were stolen from us. "Ironic" isn't it? Or so it would seem, to a person who is unaware of the Jewish agenda and their usual modus operandi.

      August 14, 2011 at 6:21 pm | Reply
      • Lawrence E.

        Wow, Scott!! Most people think that the Jews are just a bunch of comedians.

        August 14, 2011 at 9:45 pm |
      • Ppolsvoice

        Now this should be a turning to us Americans. Let us not depend on their products (which our rich brother chose to make use of their cheap labor). Lets work harder if we want to recover. No more spending beyond your means. Cut your credit cards. Bank owner will start planting tomatoes on their backyards. We can be self-sufficient. We are the great inventors of all times. Our movies produced are admired everywhere in the world. We can put back the American Dream the Chinese said we lost. Our products are always of quality which are always admired abroad. I'm not delusional and not sick when typing this. Just remember when the Russians sent their first object out the outer space. We were so worried for not being number one. We will struggle to be number one again!

        August 14, 2011 at 10:14 pm |
      • Scott

        Lawrence, most people don't THINK at all. Therein lies the problem.

        August 15, 2011 at 12:29 am |
      • Jefe


        trollolololololololololololololololol!!! Good call with saying the Jews control China. Brilliant stuff, mate, really.

        August 15, 2011 at 1:15 am |
      • Clive

        It's more cunning than that, Scott. They just pretended to move all of US manufacturing to China. Actually, they left it in the USA and they only pretend to control it all. In fact, even more cleverly, they don't actually control or pretend to control it.

        How subtle is that ?

        August 15, 2011 at 3:56 am |
    • stan

      invest in gold instead of treasuries? bwahahaha! if you owned every single ounce of gold ever mined worldwide you still would be looking at a pile of value equal to about HALF of the us debt.

      August 14, 2011 at 6:37 pm | Reply
    • E-Con

      Hey, there is a finite amount of comodites that market will get OVER HEATED AND BURST LIKE THE OTHERS. Oh, I SMELL a TEABAGGER, since your on those tubes i.e. internets google/bing/dogpile/yahoo and anything else. The tulip crash in Denmark. You can simple cut/past my words to find what WILL HAPPEN TOO YOUR COMODITES.

      August 14, 2011 at 9:34 pm | Reply
    • Bill Davis

      As the dollar declines, along with home values, and the CD not paying a dime, with Gold increasing in the debt escalates, one has to laugh or cry we are in debt up to our eyeballs...

      The world markets are laughing, and the president votes present and spend even more...

      We can spend our way out of debt, sure we can....

      August 14, 2011 at 9:44 pm | Reply
    • Jason

      If China thought silver or gold were a better, safer investment, that's what they'd be holding in reserve instead of dollars. The value of treasuries is at historic high right now. If China wanted to divest, they could do so at no loss (at least, they could divest gradually).

      The premise of the article is correct. China is doing a favor to China only. They may be mad, just like American citizens, that congress went down to the wire on raising the debt ceiling, or that more isn't being done with regard to the deficit, but if they want to divest, theres nothing stopping them except their own best interest. China wants their currency devalued compared to the dollar and they want to hold safe debt.

      America doesn't owe China any favors. America's already doing China a favor by being the safest possible place to park their budget surplus.

      August 14, 2011 at 9:57 pm | Reply
    • Hawk

      Why would anyone buy REAL THINGS???????

      August 14, 2011 at 10:00 pm | Reply
    • Hawk

      Gold, silver, oil! You do not get paid back!!!!! Assets!!!

      August 14, 2011 at 10:05 pm | Reply
    • shame on you

      shame on you ! Why don't mention the drop down of US Dollars ?

      August 14, 2011 at 10:16 pm | Reply
    • nofed

      American destruction is at the hands of the federal reserve.

      August 14, 2011 at 10:23 pm | Reply
    • Sean

      None of you have ever asked a Chinese about China... I remembered some of you predicted China to invade Taiwan.... China being so aggressive.... in the past 60 years since communists took over China, it has invaded only two countries: North Korea and Vietnam, and had border conflicts with several countries, and most of them resolved. United States? Don't let me start counting. So why is China more dangerous than the United States militarily?

      August 14, 2011 at 10:37 pm | Reply
      • Roger

        @Sean – Really? What do you think Tibet is all about? What about the war with India in 1962? Also, please talk to the Oiyghurs. What about the communist invasion of Malaysia in the early 1960s? Please also chat with some people in Inner Mangolia. etc. Many of these were land grab/ or attempts. Please know your history first.

        As for the US, show me one country where they have stayed on. Yes, it is true that the US has represented and fought for a global economic regime – and like ALL POWERFUL nations in History – has consistently sought to ensure that success of the global economic regime is to its' own advantage first. The population and citizenry of no other country in history has been as vocally critical of their country and about 'fairness', as those of contemporary USA.

        I am a new immigrant to this wonderful nation of ours. I admire your ability to criticize, but also for giving me the opportunity for the rebuttal. Please just be factual – and smile, my friend – we are not as bad as you think we are 🙂

        August 15, 2011 at 1:35 am |

      This is a huge hypothetical – but let's play out the disastrous chain of events that would happen if China began to divest. Fareed you are such a tool????? Everything in your post was pure speculation. Could you at leat find some hard facts?

      August 14, 2011 at 10:49 pm | Reply
    • ray

      Ray writes:

      If it were me I say raise a national sales tax. And pay everything off.

      August 14, 2011 at 10:52 pm | Reply
    • oldboldgold

      I didn't get he was saying either side is in good shape... both are addicted to something that is unsustainable.

      August 14, 2011 at 11:14 pm | Reply
    • blabla

      what would you expect? look at history of civilizations. those who control the future exchange of commodities, became an empire...which we are possibly, still ahead of other countries... as we look to sell destruction. which i postulate we are good at this devastation. only to our demise. the hard choices must be made, and they do not help the wealth of a few. sorry, wait i'm not sorry, i'm liberally minded and realistic human with an education our gov't is cutting. to heck with our kids! lets just leave them trust funds and...wait, i can't afford that. well i guess i'll just vote in fear. bla bla bla

      August 14, 2011 at 11:36 pm | Reply
    • Leland

      The article is pretty spot-on. There's an old saying in business:

      "If you owe someone $1000, you have a creditor.
      If you owe them $1000 BILLION, you have a partner."

      August 14, 2011 at 11:41 pm | Reply
    • Leopold

      Well....He's right that China is not doing us any favors. Not to mention that they steal technology constantly....they got the specialized materials from our downed Bin Laden raid helicopters courtesy of Pakistan. China is not a friendly country and it is hardly a democracy. Basically run by thugs who have no legitimate claim to power. They desperately want Taiwan but are unwilling to become a true democracy which Taiwan would consider joining.

      August 14, 2011 at 11:59 pm | Reply
    • Bob


      Let's say I sell you so much gold that you yourself push up the prices of Gold to unforeseeable highs. What happens when body wants to pay the amounts that you do? They sell or stop buying, driving the prices back down. And who says China isn't doing a little diversifying anyway?

      The difference between stocks and commodities, vs Bonds, is that Bonds have real value – they are paid in interest rates instead of fictional demand.

      Guess where stock-flee-ers run to? The bond market. It's a safehaven, even in a downgrade.

      August 15, 2011 at 12:16 am | Reply
    • Bob

      What about needing to keep their money weak? If they do what you say, then their currency will appreciate. They're a export driven economy, they would be hurting bad from that as well.

      August 15, 2011 at 12:41 am | Reply
    • c spencer

      The who is benifitting is large corporations and banks, its that simple.

      August 15, 2011 at 12:41 am | Reply
    • Paulo Garcia

      as every economist know, gold or petroleum or thinks like that is NOT investment. US should do actions to grow the value of US dollar to chinese and do not accept the US $ undervalue. if you don't know where to invest, i can give you a suggestion: BRAZIL.

      August 15, 2011 at 12:48 am | Reply
    • x56s

      To the Chinese: "Owe u $200, that's my problem. Owe u $1 trillion, that's your problem"

      August 15, 2011 at 1:05 am | Reply
      • Tony L

        Typical western mentality until you start losing your house and land.

        August 15, 2011 at 1:44 am |
    • LJTurner

      The problem is, the whole world economy is in a mess. Bubbles burst and our economy is one big bubble and it is slowly unwinding. We're ALL going to have to deal with this economic mess for many years to come. Voodoo economics my friends, are coming back to haunt us all. The next boom economy will not come for at least 20 – 25 years. We're all in deep doo-doo.

      August 15, 2011 at 1:19 am | Reply
    • DHarri

      China is like Obama they talk out of both sides of their mouths, China artificially devalues their currency to keep their economy going against the US currency all the while holding a huge amount in America Securities. They also have legal slave camps as their people don't know any better but to work from sun up to sun down with no days off.

      August 15, 2011 at 1:21 am | Reply
      • nonsense

        If Obama and China are both speaking with two sides of their mouth, you are speaking with the whole mouth and we get lots of hot air only!

        August 15, 2011 at 5:54 am |
    • jim

      Does china make anything which is a necessity..Nope ..Idea now should be just stop the import of chinese goods..There aer no debts to be paid..Quite simple..understand one thing Chinese never make a prodcut which has a monopoly..So tahts your strength..What the Author did say is yes.. China is like a parasite feeing on its host

      August 15, 2011 at 1:34 am | Reply
      • sv2000

        you're absolutely right! None of the stuff made from china are of necessity or not replaceable. they are copies of other safer quality goods. we can keep our garages clean by not bringing home things because they are dirt cheap figured they don't effect the budgets. Eventually, they do add up. If everyone stays off walmart or similar places for a month now and then will see that nothing will go wrong at all.

        August 15, 2011 at 3:16 pm |
    • stevenabb

      Remember the golden rule of banking: If you owe the bank $100 dollars, your in trouble.
      If you owe the bank $100 million, the bank is in trouble.

      August 15, 2011 at 1:34 am | Reply
    • TurkeyTalkingTime

      That was a well written breakdown of this trade-off that Chinese and America have with

      each other financially. I also understand the point-of-view that the Chinese have about

      American debt, lately.. As an American, I also wonder why in the world did we stop making our

      own products? Why did we shut down all of our steel production, and automotive production

      or sell them to Asian car makers? Detroit is a ghost-town. America was the place everyone

      in the world came to purchase products they wanted, and was considered to be the best

      for a period of time. Some of our classic cars sell for 100x what they originally sold for today at car auctions to Chinese and European collectors.. Something changed with the direction of American businesses, and
      their strategy to make as much money possible, without any thought or basis for the future
      of American citizens, and being the best country in the world, and continuing to be an example to other nations,
      and that they would want to be more like America. That was what I believed was the point, and our destiny, when I was a child
      growing up in America. This story has changed. Americans are a strong, patriotic people, but
      we were also interested in easy-solutions, and over the last couple od decades we have been less and less interested in the security of that system for future generations as much
      as our government wanted to spend more and more of our money on programs that benefited only the few, and focus on solutions like GATT AND NAFTA globalist trade deals that only benefited everyone other than Americans first. Globalism is
      real, and it appears to be what everyone wants who works to invest their money into finance or markets.
      Not just Americans. Chinese too. Even the EU. I personally would like to return back to the time where America was the best
      country in the world, with the best cars money could buy, and the highest innovation ratio and
      break-through scientific inventions. There are so many things wrong in this world today could benefit from
      something like this more now than ever before. Who else has proved to handle that task?

      As the world population increases, if we fail to have the foresight that we have lacked now for the last 30 or 40 year as a nation, simply
      blackmailing (financially at least) the Chinese and the EU into this ridiculous globalist strategy, with no real
      end in sight except a globalist new world order, something I doubt very much many average
      Europeans, Chinese, or Americans wish to have happen, we may never have the opportunity to return to what is good
      for our own people, for our own future generations, and not some imaginary new world that
      will somehow fix itself by going bankrupt first. I will say that I have no easy solution either. But it would
      be better than some strange fallacious financial theory how the Chinese are the same as Americans
      financially, and that we continue this strange dance, or we fail. We didn't have this problem
      for hundreds of years before in America, and we were the best country in the world in so many ways. China
      didn't have this problem before, and they were one of the most solid societies on earth for thousands of years. We may
      have won the war against many of things that we both mutually stood together with in the past, but we have
      undoubtedly lost the peace of mind regarding each of our own countries best-interests, ourselves, and
      our own people/children/elderly. How strong can the individual be or as successful will they ever become
      if the end-game strategy is bankrupting and ruining everything that worked so well up until the last
      couple of decades for the purpose of some new world order.. I'm not satisfied with the media telling me that the Chinese are damned if they do and damned if they don't, because that also means we here as Americans are damned if we do and damned if we don't too. That is a childish and stupid justification to have to accept for any stable system to exist for the long-term, and deep down we all know this to be true, though we may not wish to admit it openly in the media.

      August 15, 2011 at 2:02 am | Reply
    • ilan

      i cant belive it
      one man with brains in all of CNN formes
      you must be on the pay.

      August 15, 2011 at 3:29 am | Reply
    • abu

      China has other ways of parking their assets. They will buy up the USA. Yes, we are gonna be your new landlord. Please be nice to us or we will boot you out of your apartment or office.

      August 15, 2011 at 4:33 am | Reply
    • Duque

      The reality here is simple: USA should stop borrowing more money. Fantasizing about what could China do is a waist of time and energy. All liberal journalists are trying to tell us that there is nothing wrong with borrowing more money to China, cause they are in the same vicious cycle. Stop making excuses please.

      August 15, 2011 at 7:05 am | Reply
    • jhnjul

      There isn't enough gold and silver on the planet for the kind of cash we are talking here. There is no other consumer base in the world that could absorb China's goods and they, at this time, are not prepared to put their billions of people to work should the worst happen. Plus China is already busy squashing growing protests, revolts, and uprisings due to working conditions. Losing a few million jobs would put tremendous pressure on the Chinese government to implement steep and swift changes to maintain order and control. Yes, at this time they still need the US nearly as much as we need them, scary. Two superpowers are not going to war in this day and age over debt. The future shortages of resources, food, and water are much more volatile.

      August 15, 2011 at 7:14 am | Reply
    • Bubloo

      Farid is against China Why?? becuase he is an Endian and CHina has kicked Endian's back side quite hard when they fought . So they put the Arms doen on that front realizing that tiger has teeth and claws intact and their Endian Cow is help less in that fight . So they only do mouth bashing against China. If you are spending more and your lender adviced you to spend wisely before you gone bancrupt is a favor.

      August 15, 2011 at 8:39 am | Reply
    • joeperkey

      I don't think you understand the point here. Maybe you should read it again and think.

      August 15, 2011 at 8:56 am | Reply
    • GuyinCanada

      The thing about arguing with someone over the internet is: whether you're right or wrong it doesn't matter. you're still a retard.

      August 15, 2011 at 9:41 am | Reply
    • knightforx

      China is only trapped in the sense that they are going to be bagholders if we default. Can you imagine the "problem" of having so much cash that you don't have any place to park it? Gee, that sounds so catastrophic. If only we had that problem. Trust me, they can find plenty of places to put the cash if we decided to "cut them off" from our treasury bill market. Just typing that sentence makes me LOL.

      August 15, 2011 at 9:43 am | Reply
    • john

      yup being arrogant when you owe more then you make is a clear sign of stupidity , and he's being paid to get this edited ?

      August 15, 2011 at 10:02 am | Reply
    • Xm

      That is not correct.
      China has 1.3 billion population. It is not any other countries. China just needs to turn it's economy from exportation to supply it's own people.
      Build up National medical insurance, unemployment insurance, free education, invest it's money to high technology agriculture and biology technologies, even defense technologies.
      Let the cheap labour, low added value, exportation companies to get bankruptcy. Move the social resource to where the market leads to.
      By this way, china does not need an big importer. China can sell off any single USD.
      That will be the future of China.

      August 15, 2011 at 12:26 pm | Reply
      • Xm

        Then, US has to produce things. Made in China will not be as cheap. Eventually, US will create value by it's people to pay down the debt.

        The easiest way to solve this problem is to let the Chinese currency to increase. Once this is succeed. All the problems can be solved.

        August 15, 2011 at 12:59 pm |
    • Gregory


      In those instances the Chinese military had the advantage of being close to home and close to an easy flow of supplies. In addition while their troops weren't as well trained, they were acclimated to the environment and had far more detailed knowledge of the region.

      In any case, China going to war with the US over debt is ludicrous as it doesn't even accomplish the aim. In the worst case they lose and as a treaty action we have them wipe the debt, in the best case they win a stalemate and spend a ton of money getting there and likely the debt is reduced as a treaty action.

      August 15, 2011 at 12:28 pm | Reply
    • sv2000

      How do china buy gold without dollars? Yuan has no values and no one will take it. For the commodity purchase, do china sends it's carrier to haul them home? No, bring a brief case for the certificates and stick with something that makes economically sound. Gold and silver are metal, they are good for jewelry and electronic products. They are limitted and are not source of protein! In case of mergency, a bag of food and water worth more! It may sound annoying but remember, the china should worry about how to maintain business relationship with the world for it's own survival. The chinesse presses are mostly lack of knowledge and they are talking too loud as usual.

      August 15, 2011 at 12:34 pm | Reply
    • Big A

      In the Future Silver will BE WORTH MORE than GOLD. Trust me. DO YOUR RESEARCH.

      August 15, 2011 at 5:40 pm | Reply
    • Billy Gee

      No, China doesn't have alternatives: no other market is large enough – metals market is too small to absorb a trillion in purchases, and the other edge of the sword is that China needs to keep the yuan low. If they stopped buying dollars and bought resources – oil, minerals, etc, the yuan would rise – just like the aussie and the loony. Get a clue before posting, eh?

      August 15, 2011 at 7:43 pm | Reply
    • lachman

      Fareed Zakaria is hundred per cent right in his assessment, I strongly believe President Obama should appoint Mr. Fareed as his economic adviser, to turn the tables down on China.

      August 15, 2011 at 11:27 pm | Reply
    • K_ANG023


      August 15, 2011 at 11:46 pm | Reply
    • JM

      I think bejings actions are proof enough. China is trapped. Everyone is trapped. Sadly the world will msot likely blame china for this global economic breakdown. China could invest in gold which in turn would increase the value of gold and who has the largest reserves of it? US. Silver goes down and who has the largest reserves of that? China. Its a scary moment. I think China is now realizing what they are causing. They like to cheat the systems and dilute the market by unfairly controlling the employment wages. China is dragging the world down and they are not listening. This is naive China at its worst. This is why China will probably get blamed for this in the end.

      August 16, 2011 at 10:01 am | Reply
    • noexpert

      And your opinion is more accurate because of...?

      August 16, 2011 at 10:01 am | Reply
    • ann

      Would still like to see USA businesses pull out of China, as they are part of the reson China is rising to Middle Class. I would rather help democratic, smaller countries rise to middle class than a country I dont trust. Some place where we dont have to face the arrogance and flexing of muscle seen by this and remnants of other Chinese govs. I understand some companies need cheaper labor, but why go someplace where they steal our ideas and cheapen our products and brag about their rise while challenging us andputting us down. Or better yet, US businesses should find a way to find cheaper ways to function in their homeland and create jobs back home, thats PATRIOTISM. I'm not a financial, business expert, but there are many out there who can show ways to bring our corporations back from China and other countries who are not as US friendly. I would rather see them go to poor countries who would appreciate us, who I would love to help anyway. We have ideas and others steal them because we wait too long. Time to get innovative.

      August 25, 2011 at 6:05 pm | Reply
    • HonoH Tron









      December 8, 2011 at 8:19 am | Reply
  2. ZakSuckACreek

    i won't buy anything that comes from Zak. he suck. big time.

    August 14, 2011 at 3:40 pm | Reply
    • Sean

      I concur...

      August 14, 2011 at 10:37 pm | Reply
    • YouSuck a Creek and not Zak

      You show your limited education and understanding of the economics like Michelle Bachmann. Remember she said " I will not raise the debt ceiling" and let US default and declare bankruptcy. Thank God that dumb people like you and her are not managing the country's economy.
      We are in debt partly because of Bush tax cuts and a massive fraud generated by Wall Street . Why is that the tea party Republicans don't like to pay their share of tax but still want all the services from the govt.

      August 14, 2011 at 11:49 pm | Reply
    • Che-3

      ZakSuckACreek, you just jealous of ZAK 'cos of your very limited IQ which is graded as the shoe size of a church mouse. Very, very, very Tiny! ZAK has more brains than ALL GOPer's dead or alive put together. Have your tiny, peewee brains examined. You look like a typical primitive, backward GOP who HATE people with HIGH IQ's. Punk, eat your hate filled heart out. There's nothing you can do about it.

      August 16, 2011 at 9:33 am | Reply
  3. Nick

    Wow, really interesting perspective. I would be curious to know your thoughts on what would happen if we prevent them from buying t-bonds in the future as a method of reducing our dependency on them.

    August 14, 2011 at 3:51 pm | Reply
    • jheron

      For all of his talk of us vs come he never mentions the U.S.'s possibility of placing a tariff on China and the pros and cons of such an action. It would decrease our trade deficit with China while adding 220 billion in tax revenue. There would be inflation, but it would be on unnecessary goods. It would also encourage local manufacturing, or at the very least move manufacturing to a smaller nation.Let's face it, the U.S. has a huge advantage when trading with smaller countries that it does take advantage of.
      The tariff on China would only be placed until they let the value of their currency float.
      By allowing China to keep its currency artificially low without any penalties, the U.S. has been handing China billions to trillions of dollars in revenue to the benefit of large corporations who have moved jobs there at the cost of a good chunk of the American economy.
      I just want to know why no one is even suggesting a tariff which is the logical economic step when one country is keeping its currency devalued. I fully admit there may be good reasons why this hasn't occurred, but I can't think of them, and I have not heard any reasons why not to do this. Even the threat would probably benefit the U.S.

      August 14, 2011 at 5:06 pm | Reply
      • Brian

        jheron: Since we allowed China to join the World Trade Association we are not permitted to put tariffs on their products. If we do then they can counter us with other things as well as other countries could. Which in the end would be real bad for the US

        August 14, 2011 at 6:53 pm |
      • K_ANG023


        August 15, 2011 at 11:58 pm |
  4. Russell

    The Chinese government is also made stable largely by internal force of arms. The people obviously feel oppressed to some extent and they would likely prove restless should there new found upgrade in stander of living begin a backward slide.

    August 14, 2011 at 3:52 pm | Reply
    • Jason

      I know people who live in China, and while there is a lot of dis satisfaction in places, unlike the USA, it isn't directed at the central government. In China, distrust tends to exist at the local level, which is where corruption tends to lie. People get angry when local village chiefs and those who are close to them profit from urbanization at the expense of the villagers, or angry at the local businesses which sometimes operate like robber barons or mafia.

      August 14, 2011 at 10:01 pm | Reply
  5. JOHN


    August 14, 2011 at 3:54 pm | Reply
    • xchaos

      Perry scares me and he is only one of many...

      August 14, 2011 at 4:00 pm | Reply
      • j. von hettlingen

        Yes, Perry is certainly a controverse. On the one hand he loves to be an utlitarian, on the other hand a transcendentalist.

        August 14, 2011 at 5:24 pm |
    • AGuest9

      Yes, John, it frightens us to know that some of our neighbors and fellow countrymen are delusional enough to vote for any in this bunch.

      August 14, 2011 at 4:06 pm | Reply
    • Netr0

      I agree

      August 14, 2011 at 4:09 pm | Reply
    • Glibertarian

      Sorry but what does this have to do with China buying U.S. debt?

      August 14, 2011 at 4:25 pm | Reply
    • Mark

      LOL John I am not sure what this has to do with an article on C H I N A, but yes you are correct it probably would be political suicide, we just dont do that here – and lets hope it stays that way – Perry is one import we do not want.

      August 14, 2011 at 4:33 pm | Reply
    • JB

      John, this is really a petty point. Are you saying you have a good hold on your decisionmaking process? I am an atheist, but I really do not think I can pinpoint where exactly my 'gut feel' decisions come from. I know from experience however, that it usually does make sense to do what 'feels' right, and that in complex situations we do not have enough information to make a 'rational calculations', and thus have to rely on 'guidance from within'. The fact that, say, George Washington was what you would call a 'religous fundamentalist" does not in any way diminish the soundness of his decisions, as far as I am concerned. So, would not have any problem voting for him today.

      August 14, 2011 at 5:22 pm | Reply
    • johnsdaddy

      LoL @ john. were you forced to say that so you don't get taken away to a labor camp? I'm not sure anybody really wants to copy the Chinese "political" model.

      August 14, 2011 at 5:34 pm | Reply
    • Brian

      John, this is NOT CANADA. Every person has the right to vote whoever they want. Just because you disagree with a large faction of the US population who are evangelical Christians does not mean they have no right to be heard or vote someone who is like them. I don't like Perry because he is a horrible governor. But to each his own.

      August 14, 2011 at 6:58 pm | Reply
      • Jack

        Who says he is a horrible Governor. He has the third highest approvals of all 50 states governors in the polls. He has low employment compared to most states. The Democrats in Texas love him because Perry was a Democrat for six years. Hes the only candidate that will bring Democrats and Republicans together. Ronald Regan was first a Democrat as well and brought both together. Of all 50 Governors Perry has the third highest state approval ratings in all the polls. I am Republican but most my Democrat friends say Perry is the only one theyd vote for because they know Perry started Gores campaign and is a true Democrat. Trust me. hes the only candidate that will get the Democrats and Republicans to vote for him.

        August 14, 2011 at 10:48 pm |
      • Keith in SC

        Better check your numbers - most Americans are NOT fundamentalist "Christians" :
        Evangelicals – 26.3%
        Catholic – 23.9%
        Mainline Protestant 18.1%
        Unaffiliated – 16 %
        etc, etc.

        Did you get your figures from the same source that holds the the United States were formed as a "Christian Nation"? Major Fail!

        August 14, 2011 at 10:54 pm |
    • K_ANG023


      August 16, 2011 at 12:14 am | Reply
  6. t. thompson

    Fareed, you are one of the more intelligent voices in the media but I have to say you miss the point about why so many Dems are upset with's not that he compromises, it's that he compromises when the other side won't, then thinks he's making progress. Yes, he needs to engage the public and to educate them on the GOP agenda, bring it home...the absence of any mention by the media is proof positive "liberal media" is a of your guests just barely got out how the Bush tax cuts were a major part of the problem before you cut him tell me Fareed, do you have an overlord, as well? The Truth will save America, not party politics;

    August 14, 2011 at 3:58 pm | Reply
    • Netr0

      CNN is a double agent for the GOP

      August 14, 2011 at 4:10 pm | Reply
      • DerpRepellent

        Rofl. Cnn leans left, unless you're looking at it from a marxist perspective.

        August 14, 2011 at 4:18 pm |
    • AGuest9

      I agree. What is this "hands-off" policy wth the Bush administration? The same people who are ready to "impeach" Obama sat through eight years of what brought us to this point! Where was the outrage then? Everybody was too busy waving flags and saying "Go get 'um, Georgie!" So, bin Laden was captured under Obama's watch. Still, the rednecks and the aristocrats aren't happy. The money is gone. It's spent. We now have a larger deficit than before. Amazing how it's the sick and the elderly's fault!

      How many hundreds of fathers, mothers, brothers, sisters and sons and daughters did we bury? How many families have a void that will NEVER be filled? How many children will never know their mothers and fathers? A Chinook carrying the brave men that captured and killed bin Laden was knocked out of the sky. More dead. For what, now? We keep sending lives and dollars into that pit called The Middle East because George said so? I'm not buying it – but the Chinese are certainly paying for it!

      August 14, 2011 at 4:19 pm | Reply
      • joe

        Uh, George has been out of office 3 years. Mr. Obama has had 3 years to get our troops out of Afghanistan, and instead he greatly increased troop strength, yet the insurgency and taliban are as strong as ever. Don't blame George, he is gone. The Obamonator is (supposed to be) in charge.

        August 14, 2011 at 4:29 pm |
    • Seth

      The "Truth" will save America? Please.

      August 14, 2011 at 4:44 pm | Reply
  7. xchaos

    "We're probably doing them a favor."...good one. Let's keep repeating this line and all our problem will disappear.

    August 14, 2011 at 3:58 pm | Reply
  8. Jason

    So what it all boils down to is that we don't really have anything that they can use over there other than these magical green pieces of paper that can convince them to give us what we want. That does not sound like it would require very much of a work around compared to having to suddenly support your own population with 0 manufacturing facilities.

    August 14, 2011 at 4:13 pm | Reply
    • AGuest9

      Back in the 80s we were told how the economy was changing. We weren't going to have to work in mines and factories like our parents did (we were told that was a -bad thing-). This is the new SERVICE ECONOMY!

      Want fries with that?

      August 14, 2011 at 4:24 pm | Reply
  9. Kermit Roosevelt

    One would think that all this was manufactured by astoundingly smart people in untouchably high places to permanently keep the Chinese dependent on the survival of the US.

    August 14, 2011 at 4:20 pm | Reply
  10. Ken Lawson

    I think North America should avoid doing business with China Chinese all together, accept the fact they are not our friends to many fraudlent chinese companies. Do not invest or you lose!

    August 14, 2011 at 4:21 pm | Reply
    • AGuest9

      Ken, good luck with that. I went to the store to buy gauze the other day – guess where it's made? (Hint: not here.)

      August 14, 2011 at 4:27 pm | Reply
      • Ken Lawson

        How long did it last for, if you need some more come to a Vancouver BC Night Market (Chinese) you can get all crap, knock offs and pirated goods you want direct from China!

        August 14, 2011 at 11:32 pm |
    • Pumbaa

      Why trade with a country that is against religious freedom, uses slave labor, and has a one party Communist government? Are Americans that addicted to $10 bread toasters and cheap hammers? Every DVD player I looked at yesterday was made in China. I couldn't even find one made in Korea and certainly not the good old US of A.

      August 14, 2011 at 6:14 pm | Reply
      • Joe Somebody

        Common sense: Because it's cheaper. That's why. Business couldn't give any less of a s**t about how the country they deal with handles their people, they want the best deal possible.

        August 14, 2011 at 6:47 pm |
  11. Sitty

    Fareed, resident expert on all matters foreign and domestic, is at it again! CNN, please do us all a favor and find a new "expert." At least give us a few more to choose from ... Fareed has been your anti-American, golden, go-to boy long enough! And he's proved himself wrong more than right! I don't trust anything he writes because he's wrong sooooo often. I just don't understand why CNN editors can't see this???

    August 14, 2011 at 4:25 pm | Reply
    • ZakSuckACreek

      totally agree. he is over again, again and again. this guy called Zak or w/e should be fired.

      August 14, 2011 at 4:30 pm | Reply
    • CommonSense

      Exactly what's anti-American in the article above, Sitty?

      August 14, 2011 at 4:41 pm | Reply
    • eric


      August 14, 2011 at 6:08 pm | Reply
    • Dan

      I agree, Zakaria is nothing more than a very good talker. I'm from Canada and from an objective point of view, he merely makes arguments to stoke anti-Chinese fearmongering, like most of the media. I saw him in a Monk debate in Toronto and it's obvious he is supports creating a new "cold war" between the US and China, like most of the media, because there they need to blame someone.

      The fact is that China is an emerging super power. That does not mean it is game over for the US. It means we, in North America, need to change our education system, create a more skilled labour force and yes, increase the production of goods and serviecs that the world buys. No, it does not mean we need to put more tariffs on products created in Asia or call out the Chinese as the next boogey man. That isn't going to help us in the long term.

      Idiots like Zakaria are just pandering to popular media ideals of creating tension between two of the world's most important countries, who are probably going to just end up being two of the world's largest trading partners and live a peaceful co-existence as these two governments try to do the best for their respective citizens.

      Creating an "us versus them" mentality isn't going to change one thing. Zakaria is only good at painting the Chinese as the enemy, which is funny since he's representing himself as a "true American" when he is from India. The two economies of China and US have had a very successful and beneficial relationship for a long time now, while India has lagged because there are too many Indian companies that are fraudulent, undependable, or untrustworthy.

      Zakaria doesn't propose any practical solutions. It's time to stop complaining about China (because it's obvious, that isn't helping) and start figuring out how to compete with China (on an educational, economic and fiscal restraint perspective). Yes, there is painful medicine in store for us to rectify the debt situation, but we have overspent, plain and simple, based on military, social and govermnent infrastructure). It's like a household that is $500K in debt, of course you are going to have to give up some items you are used to spending on every month. The US needs to raise some revenues and also cut spending. Polls have shown that most Americans already know and support that we need to increase some taxes for the rich, and cut government spending so that this out of control spending situation is rectified.

      August 14, 2011 at 6:41 pm | Reply
      • Amol

        Though I agree with your other points, this has got nothing to do with Zakaria belonging to India. India's problems are different which dont make the trade grow as much as China's. Too many fraudlent companies? Please do me a favor and post the entire list here.

        August 14, 2011 at 7:11 pm |
      • ss

        Dan, do you really invest or Have you married a chinese? China is full of fraudulent companies. Most companies report different numbers to their govt and SEC. Do some research please. India has a much more open society (largest democracy) than China. India's problem is population density, infrastructure and corruption across a wide spectrum of the populace.

        August 15, 2011 at 12:36 am |
    • Jason

      Being smart is "anti American?"

      News to me.

      August 14, 2011 at 10:04 pm | Reply
  12. Zayrina

    Can we somehow recoup all the aid we gave China up until just a few years ago, back when they were starving?

    August 14, 2011 at 4:25 pm | Reply
    • rpfp2012

      You must of missed this:
      It is ongoing.

      August 14, 2011 at 10:39 pm | Reply
  13. Elysee

    If, as you say, America's debts seem to be overwhelmingly owned by Americans in Social Security trusts, etc, would it not be biting the hand that lends you money if you curtail Social Security? Or am I looking at a different animal? Perhaps someone can explain.

    August 14, 2011 at 4:27 pm | Reply
  14. HeIsGod


    August 14, 2011 at 4:30 pm | Reply
  15. Leo

    "We're probably doing them a favor." LMAO ..................

    August 14, 2011 at 4:30 pm | Reply
  16. josh

    Are we doing china a favor?

    August 14, 2011 at 4:31 pm | Reply
  17. HeIsGod



    August 14, 2011 at 4:31 pm | Reply
    • ThinkAgain

      God gave us all brains and expects us to use them. Simply throwing our hands up in the air and asking God to help us won't do the trick.

      August 14, 2011 at 4:38 pm | Reply
      • Ryan

        god wants us to pray. go conservatism prayyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy

        August 14, 2011 at 5:42 pm |
    • Spud

      Ah, so god hates the Chinese?

      August 14, 2011 at 5:54 pm | Reply
  18. Johnny

    Great article but you are missing one huge component. Today, every dollar invested china creates one in GDP growth. In the US, that number is 7-9$ invested per $1.00 of GDP Growth. China can start to focus on investment partnerships within its boarders and boast local demand. It can ultimately replace US demand (nation of 1.2 Billion vs nation of 300M). In addition there are consumers in Russia (although slowing), Brazil, and India. The reality is our debt and currency is losing huge value. Forget the soaring debt load 14Trillion growing to 25 or 26 Trillion. even with the additional super committee we are only talking about a tiny slice in deficit and debt reduction. What is really bad is 60 Trillion-112 Trillion (depending on estimates) of unfunded liabilities. That is an IMPOSSIBLE hole. There is nothing we can do to repay that as a nation. The only solution is to destroy our currency which is what is happening.

    August 14, 2011 at 4:31 pm | Reply
    • ThinkAgain

      The only solution is to raise the top tax rate from 36% to 39%, ending unneeded oil industry subsidies, closing tax loopholes that encourage corporations to ship American jobs overseas and offshore their profits, raise the FICA income limit from the current $106,000 to $250,000 (or even $500,000) and end our military involvements in Iraq and Afghanistan (also eliminate no-bid military contracts).

      This would go a long way to fixing our current fiscal crisis.

      It's called SHARED sacrifice and those who don't want to do it, can jolly well leave.

      August 14, 2011 at 4:41 pm | Reply
      • Bob in Pa

        36% to 39%, are you that ignorant ? How much money do you thing that will raise ?
        There are a little over 13480 Families or Individuals that make over 10 million dollars a year.

        Lets just make it 100% tax this year, they should have enough saved that they won't feel a pinch. Problem solved right?
        Oops, whats thats only 134,800,000,000 and it's not even enough to cover 1/100 the debt. Get the picture yet. There is only one solution, stop spending and pay it off.

        August 14, 2011 at 4:56 pm |
      • jheron

        Actually Bob, if you close the loopholes and also add on a tariff on Chinese goods until they allow their currency to float, we are talking well over 10 trillion in 10 years.

        August 14, 2011 at 5:17 pm |
      • jheron

        Oops, that's in conjunction with everything else.

        August 14, 2011 at 5:53 pm |
      • posey

        I'd give up my SS benefits if ANYONE could guarantee my grandchildren would benefit... I thought not.

        August 14, 2011 at 6:30 pm |
  19. Jenette

    Lets just say "F" it on the debt. Wipe that slate clean. Other countrys have done it. Short term, it would hut. Long term, it would let the U.S. start over again, without all the old mistakes getting in the way. Go BANKRUPT.

    August 14, 2011 at 4:33 pm | Reply
    • Keegan

      I dont think China would be to happy with that decision lol.

      August 14, 2011 at 5:28 pm | Reply
      • Jason

        What China thinks is of little concern compared to those who own the other 92% of our debt (mostly Americans).

        August 14, 2011 at 10:08 pm |
    • Tony L

      Your knowledge of world finance is very limited. US is not a third world country that can just go bankrupt and start all over.

      August 15, 2011 at 1:47 am | Reply
  20. TrueBlueandTrusted

    It was "The Donald" who was raising the red flag about China over the past two years, and now it seems everyone is paying more attention. Recently, warnings have been aired about the dual threats of cyber-war and economic war between the US and China... all very true... but we cannot be lulled into forgetting the growing power of China's more traditional warfare threats.

    August 14, 2011 at 4:36 pm | Reply
    • Jason

      If "The Donald" suddenly started saying that the sky was blue, I'd begin to doubt it.

      August 14, 2011 at 10:09 pm | Reply
  21. Ras Gregory

    The US would be doing good if it had bought alot of silver when the price was $7/per oz
    oh well

    August 14, 2011 at 4:36 pm | Reply
    • lamborghini-Dallas

      I did but it was $3.49 an ounce and now $39 an ounce today. while the old greenback has gone down the tube. China is buying gold, silver and rhodium as we speak and they will start around 4pm eastern time today. i am still buying gold and silver, and fixing to vacation in st thomas aboard my yacht. will have a drink to the dollar while i work on my tan. Gold luck to our president, just hope he doesnt blame anyone else while i am gone as last week he blamed his dog for eating his homework.........

      August 14, 2011 at 5:12 pm | Reply
  22. Gloria

    Hope you are right!!

    August 14, 2011 at 4:36 pm | Reply
  23. ThinkAgain

    Thank you, Mr. Zakaria for explaining this. Please come up with a simple analogy so that it is easier for American voters to understand. How about:

    China's economy depends on cheap exports. The US is its biggest customer. We go under; they go under. They won't call in our debt.

    August 14, 2011 at 4:36 pm | Reply
    • Indians

      Oh please.

      Fareed Zakaria, you should know this better than anyone else.

      if the Indians can run their economy based on domestic consumption and still achieve stellar growth numbers of 8-9% per annum, the Chinese will eventually cut the Americans off once gradual Yuan appreciation gives the middle class of China the spending power to consume China's crap that she exports to US.

      August 14, 2011 at 4:51 pm | Reply
      • Bob in Pa

        EVer seen the actual poverty in india ?
        Not a pretty site. The privledged live large while the rest suffer in silence. Thats the Obama / Zakaria plan.

        August 14, 2011 at 4:59 pm |
    • isolate

      The European Union, not the US, is China's biggest export market, and China is making serious inroads into the emerging economies that will dominate the global marketplace in a decade or so.. If the EU can pull itself out of its current financial mess, that market, too, will continue to grow. Barring unforeseen changes, China will be the world's biggest economy sometime after 2016, with an internal consumer base that will dwarf its American and EU export bases.

      August 14, 2011 at 4:54 pm | Reply
  24. Manny

    Fareed Zakaria will say anything to advane himself, I would not pay too much attention to what he has to say.

    August 14, 2011 at 4:37 pm | Reply
  25. freedom

    l agree with AGuest9 comments, war is not cheap and we all gave the GOP a blank check to free.
    I agree. What is this "hands-off" policy wth the Bush administration? The same people who are ready to "impeach" Obama sat through eight years of what brought us to this point! Where was the outrage then? Everybody was too busy waving flags and saying "Go get 'um, Georgie!" So, bin Laden was captured under Obama's watch. Still, the rednecks and the aristocrats aren't happy. The money is gone. It's spent. We now have a larger deficit than before. Amazing how it's the sick and the elderly's fault!

    How many hundreds of fathers, mothers, brothers, sisters and sons and daughters did we bury? How many families have a void that will NEVER be filled? How many children will never know their mothers and fathers? A Chinook carrying the brave men that captured and killed bin Laden was knocked out of the sky. More dead. For what, now? We keep sending lives and dollars into that pit called The Middle East because George said so? I'm not buying it – but the Chinese are certainly paying for it!

    August 14, 2011 at 4:37 pm | Reply
  26. todj

    Zak, is a Globalist, member of the CFR and is pushing an agenda for the power elite. It's pretty easy to see he's again, trying to push the "All is well" button as well. The overall agenda of the World Banking Elite is to bring about a One World Currency, controlled by the BIS. Having the BRIC nations screaming for a new reserve currency, is playing into the IMF/BIS' hands. And good ole' Zak is there to push that agenda hard. But I don't know why I'm sitting here trying to educate the sheep. Really need to wake up people....see the forest through the trees...ugh

    August 14, 2011 at 4:37 pm | Reply
  27. KungPao Chicken

    Why does Fareed Zakaria keep being defensive about America's debt? Having lots of debt just can't be good. The American system is just broken and maybe outdated. Maybe we should try to learn from the Chinese. Even S&P has thrown out the big stick. What the Chinese press are saying is irrelevant. We need to swallow that bitter pill now – higher taxes, cuts in government spending – or Fareed may soon find himself working for the Chinese press.

    August 14, 2011 at 4:39 pm | Reply
  28. gtbdave

    As China builds consumers, and republicans destroy out consumers, there will come a time when China does not need our consumers, they will have consumers of their own. They are a billion, we are only 300 million, not all consumers, and a shrinking consumer base. They wouldn't all have to be $50K a year consumers, just middle class consumers on their scale. China is still predicted to be the #1 economy, with authoritarian capitalism, while our democratic capitalism is not doing too well. We have no growth, most predict no growth, while China gets double, or near double digit growth. The tea party tried a bit of authoritarian capitalism, my way of the highway, or more like, we will ruing the economy if you don't, it didn't go that well, lost trillions in just a few days, much more than the tax breaks to the rich themselves. Authoritarian capitalism might work well, if the top dog knows what he is doing, you can't just put anyone in charge of that, certainly not the tea party. As China becomes the top economy, we will dance more to their tune, we will just be a non-player on the economic front, military, diplomatic, we won't count, and our economy will get down to next to nothing. Sure they don't matter much now, but slowly and surely, they rope it all in, catching a few off guard and complacent, saying we got China just where we want them. Stil they don't say that China will not be the #1 economy, and all the trappings with that. With no US gdp growth, it's likely to be sooner than later, all the economist are now re-doing all their projections, it might be by the end of next week that we fall down below another superpower, an also ran, down in the pack, maybe 3rd, maybe lower, but all along, we will have China just where we want them, got them on a string. Just fell into our cleverly designed trap, we don't grow, and they grow like hell, they fell for it hook, line, sinker. We are so clever, we're # 2, we're #2, rah, rah,............we're #4, but in our hearts, still #1, nobody else sees that though.

    August 14, 2011 at 4:43 pm | Reply
    • ladybear

      China is an ancient country, with a large working bureaucracy, and long term planning and goal setting, long before the US was ever populated by Europeans. As a result, while we think in terms of what will happen next week, next month, or next year, they look down the road several generations. They are planning for 2020 and beyond, for the country and power their children's children's children will have. One step at a time. China has absorbed massive invasions, revolutions, and natural disasters, and keeps moving on, rather like the lava from a volcano, it moves, so slowly, absorbs or envelopes all in its path, until it reaches the sea, where it becomes new land. China is growing, and spreading, slowly, quietly, inexorably, and will eventually take over the world, one store at a time. The American consumer is just speeding up the process by 'saving money' today, and helping pave the way for a future where North America is dominated by, and perhaps ruled from, China. And we won't even know it has happened until it is way too late.

      August 14, 2011 at 5:12 pm | Reply
  29. isolate

    To put things in their proper perspective, imagine if, during the Cold War, the USSR had amassed over a trillion dollars of American debt. They would have had tremendous leverage over us, better than any ICBM. China is not a declared enemy, as much as the Republicans try to make them into one. If they succeed, and China decides to pull the rug out from under us for political, not monetary, principles, we are properly doomed. China is the world's biggest creditor nation, with plenty of reserves to cushion the blow to its people; America is the world's biggest debtor nation, and would be ruined, our global credit score probably dropping by too much for us to compensate for, given the Tea Party-style obstructionism in Congress today.

    August 14, 2011 at 4:44 pm | Reply
  30. Bob in Pa

    Mr. Zakaria still doesn't understand the world at large. I suggest he stop writing and take an extended vacation spending a year in every country he can possibly visit. Maybe he will finnallly understand government propaganda and how it can be used effectivly in deceiving the masses. In China, he will find that the government wants the people to think that America and capitalism is bad and has failed. Strange that he doesn't get this, he has been practicing it here in bulk lately.

    August 14, 2011 at 4:44 pm | Reply
    • vijay

      wow, so correct !

      August 14, 2011 at 5:33 pm | Reply
    • Paul

      He's not talking about what China says... he is talking about the operational realities behind what China can do. And he is dead on. China needs us just as much as we need them if not more.

      August 15, 2011 at 4:56 am | Reply
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