china can pretty much do as they please in the world and no one can stop them. they are super conservative these days and haven't made many waves internationally lately but if there was a change in top leadership or a major local uprising, china would likely do something.
what sorts of things?
well, for one, they could invade Taiwan and the US would be able to do nothing.
the reality is that china is the largest holder of US treasuries (surpassing Japan this past September). if China wanted the dollar to collapse and send this country into an economic fiasco, all they would have to do is start selling these treasuries. if China simply stopped buying US treasuries, we wouldn't be able to finance all these giant spending plans.
right now, it is in China's best interest to keep the US economy chugging along since we are the biggest buyers of their products. i'm glad they're on our side. there's even speculation that China is dumping European bonds in an effort to strengthen the US dollar. we are in a situation where we need China and for now China needs us. but with mutually assured economic destruction, the country that flinches first will lose. and China's politics allow it to flinch last.
so while we may talk tough to china, the reality is that China is truly the only super power still standing. China can do what it wants. if china wants to take Taiwan, they will. the US will sit idly by.
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