The Boston Globe has an editorial emphasizing the need for economic cooperation between Washington and Beijing as the world tries to find a way out of the financial quagmire:
If there is a saving grace in the economic crisis currently battering both economies, it may come from the same economic interdependence that worries people in both countries. Having for too long lived beyond their means, Americans have become heavily reliant on China to finance the US national debt. China’s dollar holdings are close to $2 trillion. As China seeks to stimulate its own economy, it will inevitably need to spend more at home, save less, and park less of its foreign reserves in US Treasuries.
Such a change of direction could harm the US economy badly, forcing an increase in interest rates at the worst possible time. But China would be hurting itself financially if it withdrew too much of its money too fast from US holdings. The value of its remaining dollar investments would plunge, and so would US demand for Chinese products.
So the need for cooperation is mutual.
