Demystifying China and U.S. debt
January 18th, 2011
08:38 PM ET

Demystifying China and U.S. debt

Despite what talk radio and late night comedians may say, China does not own the U.S. Treasury Department. Numbers show that 75% of Uncle Sam’s growing debt is in the hands of U.S. interests.

Of the international lenders, China is owed the most, just under $900 billion. But with America’s debt approaching $14 trillion, that’s not even 7% in Chinese hands. Of course, if China were to suddenly call in its notes, it would cause chaos to the U.S. economy.

But Christina Larson, a China analyst with the New America Foundation, says Beijing and the rest of the world still consider taking on debt from the United States a safe bet.

"China needs a place to park its capital and there’s no place that's as stable, easy to purchase and feel safe in as the United States."

Yes, Uncle Sam pays its interest, even if it has to borrow to do so. And, of course, with our stores filled with many goods made in China, the trade deficit has become a political hot potato. Yet, while China is the largest exporter in the world, the CIA Factbook reveals Germany is a close second, with the United States the No. 3 exporter, less than $200 billion behind China.

The outsourcing of manufacturing to China gets a lot of play in the United States, where fewer things are stamped “Made in America.” Experts say many of those jobs will never come back.

One nagging issue is the notion that China keeps its currency low to make its goods considerably cheaper to U.S. consumers. It’s a valid point that Beijing addresses every so often. President Barack Obama will, no doubt, push Chinese President Hu to do more on that front.

Hu also has domestic conundrum to deal with, analyst Christina Larson said. China has "to absorb millions of people every year into the labor market to prevent the dreaded social unrest," which will always be the top priority of the Chinese government, she said.

"They have an oversupply of people at this moment who've graduated from colleges and aren’t able to find high skilled jobs. An interesting fact that between now and 2030, there’s expected to be about 350 million people who move from the countryside to cities in China. That’s more than the entire population of the entire United States."

With the U.S. a much smaller market, in terms of population, China must turn inward to create a better consumer climate so Chinese people with extra money can buy the things they make, Larson says.

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Filed under: China • Economy
soundoff (168 Responses)
  1. Mickey

    What a load of rubbish. People can whitewash it as much as they want, but the global elite have made the USA a servant of China and this relationship will only deteriorate. MSM does not tell the truth but uses its "influence" to steer people away from the truth.

    January 19, 2011 at 9:17 am | Report abuse |
    • C.C

      That the TRUTH

      January 19, 2011 at 5:06 pm | Report abuse |
    • BigBen

      They own less than 800 billion dollars in bonds that somebody else would have bought anyway and we'd have to pay on when they mature. If these said bonds were all owned by Americans would you still be panicked? You know that the US makes 14 trillion dollars every year right?

      January 19, 2011 at 8:49 pm | Report abuse |
  2. Buy American

    The MultiNational Corporations are the ones that benefit from the imbalance. They keep selling cheap goods to americans. The problem is if americans are not working they can not afford to buy goods.
    American companies are taxes 25% to ship into China, we only tax them 2% to ship into the US. Why??? That is not a fair or free trade.
    The Chinese don't own us – however The Multinational Corporations has bought our lawmakers. Wake up Folks.

    January 19, 2011 at 9:17 am | Report abuse |
    • Fortune Cookie

      Right on the... money

      January 19, 2011 at 5:45 pm | Report abuse |
    • BigBen

      My guess is that if we taxed them 25% the prices would be waaaaaaaaaaaaaaaaaay high and we'd probably totally destroy their economy.

      January 19, 2011 at 8:51 pm | Report abuse |
    • Clay

      Chinese leaders were doing very careful governing. They don't want to give any freedom to acheive the leader goals. It has become like a business for them (Capitalism). They also wanted to become third largest country in the world by annexing Taiwan ( Nazism) , so that they can over take USA by Land area. I am not sure whether annexing Hong Hong is profitable for Chinese as they have a large amount of debt as well as they have a lot of freedom unlike boneless mainland chinese. I think the chinese leaders forgot communism.

      April 17, 2011 at 9:23 pm | Report abuse |
  3. Revolter

    Nobody own the US, this can be fixed with one signature. The signature would basically say; "Sorry china, the corruption of our previous leaders, corporations and your state is illegal and destructive to our economic sovereignty. So no more imports and no dept is going to be paid to you until we can put the jobs back where they belong." the Chinese aren't entirely at fault and certainly aren't our enemies. The problem is our leaders are owned by corporations that have little interest in protecting US domestic economic interests. This president promised change. What we got was not only the same, but even worse. If the American voters again vote for a political insider I.E.: A Dem/Rep, they will be essentially sticking a gun into their mouth and pulling the trigger.

    January 19, 2011 at 9:22 am | Report abuse |
    • Revolter

      What is really hilarious is that almost every knows what the problems is, who is at fault, and how to fix it. We try to put people into office that will fix it and once they are in they do a 180 on us. These corporate CEOs and their political lapdogs should be hanged.

      January 19, 2011 at 9:29 am | Report abuse |
    • Revolter

      And also the editors of the major news organizations who are clearly assisting in this systematic deconstruction of the American voters control of their government. They are the most to blame, because they are supposed to be our advocate when government goes rogue.

      January 19, 2011 at 9:35 am | Report abuse |
    • Buy American

      Follow the Money it works every time.

      January 19, 2011 at 9:37 am | Report abuse |
    • Revolter

      The bank of London and the Rothschild family is where the money trail ends. That is the enemy of all nations.

      January 19, 2011 at 10:17 am | Report abuse |
    • Cliff Vegas

      And we will tar and feather you for bringing on the Mother of All Depressions – it would be a global economic disaster. We'd go back to trading pukka shells for a bucket of milk and a handful of eggs. See? That's the problem these days – anonymous opinions with no backbone of fact. It's tiring – exhausting – engaging the ignorant masses who ascribe to one ideology or another. Progressives mimic NPR, Conservatives parrot Limbaugh. The Romans were felled by lead poisoning; America will die from its own idiocy.

      January 19, 2011 at 5:10 pm | Report abuse |
  4. ARob

    Here they come, all the people whose water-cooler arguments have just been debunked by this revealing article. You know the ones, they all wear Sarah Palin buttons and pronounce the word "nuke-you-ler," and pretend to be the "real" Americans, while cutting taxes and cutting government and creating the very problem they're complaining about.

    January 19, 2011 at 9:31 am | Report abuse |
    • Brownstain

      Puleeze, no more mention of Palin. Just go away, Barbie.
      No more screeching diatribes, or reality shows. No more trailer trash inbreeder pretenders to the presidency.

      January 19, 2011 at 9:37 am | Report abuse |
    • Revolter

      Haha, Ive tried to say it like that about five times now and I can't without reading it and saying it slow. I disagree with that though, they are ignorant and all that but, it is the media's responsibility to educate people in an honest way... whichever side of the political process they are on. They don't do that, they purposely spin everything to appease their masters and continue the corruption train down the tracks. We'll call this the unholy trinity Corporations / Government / For Profit Media.

      January 19, 2011 at 9:47 am | Report abuse |
    • Cliff Vegas

      Revolter... "it is the media's responsibility to educate people in an honest way." Seriously? Are you really serious? How about this... educate yourself. Get out and read a real book. Take a class in macroecon. But rely on the media? What a maroon.

      January 19, 2011 at 5:17 pm | Report abuse |
  5. Revolter

    And also the editors of the major news organizations who are clearly assisting in this systematic deconstruction of the American voters control of their government.

    January 19, 2011 at 9:33 am | Report abuse |
    • Brownstain

      Too late. We lost control 10 years ago.

      January 19, 2011 at 9:38 am | Report abuse |
    • Cliff Vegas

      Correction. YOU lost control a long time ago. The rest of us – a shrinking percentage of the population, I regret to say – are working the problem intelligently; quietly chipping away whilst you slumber in your doublewide.

      January 19, 2011 at 5:20 pm | Report abuse |
  6. Brownstain

    I blame Jesus.

    January 19, 2011 at 9:35 am | Report abuse |
    • Buy American

      He did say give unto Cesar that which is Cesars (money) and unto the God that which is Gods.
      He tore down the temple where the moneychanges had set up business.

      January 19, 2011 at 9:42 am | Report abuse |
    • Revolter

      You mean Horus. The Egyptian sun god, that's where they got Jesus from. The Alpha and Omega, born of a virgin, died on a cross, reborn on the 25th of December... that Jesus?

      January 19, 2011 at 9:51 am | Report abuse |
    • Prophet

      blame game..... it"s the easy way out when you don't know what to say or have a clue what's being said. Maybe go ask your neighbor and they will explain it to you.

      January 19, 2011 at 5:42 pm | Report abuse |
    • Delly

      Jesus drove the seller of doves out of the temple. Wrong place for the wrong job. Temple shall be called a house of prayer he said. So not a cartel, or a political coperation. Note Jesus did not have any problem with tax men (Zacheus), or ceaser, or business people (he sent Judas out to buy supplies) The driving out of those guys (thieves he called them) is the same as God driving satan from the heavens. Funny satan was also called a thief.

      January 19, 2011 at 5:57 pm | Report abuse |
    • tracy

      how is it the sky wizards fault?

      January 19, 2011 at 7:59 pm | Report abuse |
  7. linniewv

    I think I would collapse in shock if the Posted Comments in these forums were ever to discuss the real underlying economic, global, social issues represented in the article about which folks rant and rave. What if readers were to directly address the real issues and not harp on little points that they think make them appear smart?

    January 19, 2011 at 9:40 am | Report abuse |
  8. Me

    I blame the genious who thought of a created the Jesus story. He is clearly the greatest con man of all time.

    January 19, 2011 at 9:41 am | Report abuse |
    • Buy American

      Don't dis Jesus. Take a lesson from the Beatles. .

      January 19, 2011 at 9:47 am | Report abuse |
    • Revolter

      All Jesus is is the ritual of recognition of the sun stalling for 3 days on the winter equinox, and on the 25th starting its march north again(being reborn), every ancient culture has this story. Alpha and omega born of a virgin(Virgo), died on the cross(the sun stops is progression south when it lines up with the southern Cross on Dec 22nd), Resurrected after being dead for 3 days on the 25th of December(the sun doesn't precess for three days, on the 25th of Dec it begins its precession north). this is the Story of Kali, Horus, Mystra just to name a few of the some 37 "messiahs".

      January 19, 2011 at 10:01 am | Report abuse |
    • Revolter

      The sad part is God is floating around up there in his Pillar looking down on us saying to himself "These idiots are still worshiping the sun... and the sad part is; they are so ignorant that they don't even know that's who it is they worship. And they wonder why I've been forsaken thee."

      January 19, 2011 at 10:09 am | Report abuse |
    • Prophet

      so you are saying the greatest story ever told is a hoax?

      January 19, 2011 at 5:40 pm | Report abuse |
  9. LJB

    re: America’s debt approaching $14 trillion... Actually its PAST the $14T mark: $14,053,525,000,000

    January 19, 2011 at 9:43 am | Report abuse |
    • Revolter

      just to alert people to this figure, that is 46,845 dollars per person in this country, or roughly 160,000 dollars per household that has been stolen from us by the banks.

      January 19, 2011 at 10:40 am | Report abuse |
  10. Bmussberger

    All in the name of free trade...free trade is not "free" when one country anually absorbs a significant trade imbalance and it's not really "trade" when that same country's main exports are it's jobs and intellectual property...
    When the people who benefit the most (multinationals) are not concerned with the fate of American citizens and
    their actions are sanctioned by our own trade agreements....you have national suicide

    January 19, 2011 at 9:49 am | Report abuse |
  11. Nitalynn

    It's a mote point if we let them continue in their space effort to establish a moon base. Then they will build a rail gun, collect some moon rocks and own the whole world. Meanwhile we sit here planning imaginary trips to Mars and twiddling our thumbs.

    January 19, 2011 at 9:50 am | Report abuse |
  12. Cold War Veteran

    I could see this coming nearly 20 years ago, when in college I wrote a paper on the balance of power in the 21st century. The writing was on the wall even back then: China was destined to be a new world super-power, and overtake the US economically.

    I'm not worried. We are in a position to partner with the Chinese in such a way that will significantly benefit both countries, that is, if we can get past our own stubborn pride.

    January 19, 2011 at 9:52 am | Report abuse |
  13. Peter E

    If you don't like China, just stop buying Chinese products! Oh, but Americans like cheap labor and therefore cheap consumer goods. Heaven forbid we pay extra to keep American labor going! It is so much more convenient to buy cheap stuff from China (as well as a dozen other Asian countries) and then blame our problems on their 'manipulations.'

    As if we are sooo innocent about currency manipulation (see the Fed, what we deceptively call 'monetary policy') or trade manipulations (few other countries have such high tariffs as we do, and let's not forget our huge farm/other industry subsidies) ourselves.

    January 19, 2011 at 9:53 am | Report abuse |
    • Bmussberger

      I agree – stop buying Chinese, that is if you can find an alternative product anymore...but I disagree about
      the tariffs – they need to be higher, not lower and we need to ban corporations who shutter manufacturing facilities
      in the U.S. so they can produce offshore from selling their products here for a minimum of 5 years – give them something to think about besides their bottom line for the next 4 quarters

      January 19, 2011 at 10:00 am | Report abuse |
  14. TALKing point

    I think all people in the US should pay that debt now. The rich people pay the most follow by the middle income people.
    let raise tax on the rich people to 90% to pay the debt.

    January 19, 2011 at 9:54 am | Report abuse |
    • Hello

      That's brilliant comrade, and after all those bad, nasty "rich people" are taxed hard enough, they won't be rich anymore
      and they'll fall into the middle income bracket...and the middle will have fallen into the lowest...and the lowest will become
      wealthy because they don't pay taxes anyway...and then we can repeal the law then because the world will be as it should be, right?

      January 19, 2011 at 10:09 am | Report abuse |
  15. America fell asleep

    We need a 2nd industrial revolution in this country. If we built it, they will come. In order to do that, we need a massive amount of government spending to 1. Fix our crumbling infrastructure 2. Get our education up to 21st century standards. This is what the Chinese have been doing for 20 yrs. The only obstacle? The American people who have early 20th century ideas and are stingy.

    January 19, 2011 at 10:03 am | Report abuse |
    • Revolter

      So we take down some of the 85% of our gross national product being spent on military contracting to pay for the reconstruction of factories, the aging infrastructure, the ailing education and health care system-less mess. And every gets to punch a CEO in the face day will be the new holiday.

      January 19, 2011 at 10:25 am | Report abuse |
    • conoclast

      Accurate. Depressing but accurate, the 'stingy' part especially. We have a pre-war infrastructure, an increasingly under-educated workforce, and somehow in the face of all this we've forgotton what "investment" means.

      January 19, 2011 at 10:44 am | Report abuse |
    • tracy

      what tha heck have u been smoking?

      January 19, 2011 at 8:14 pm | Report abuse |
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