China’s U.S. debt holdings make it a powerful negotiator

February 17, 2011

Worrying about the power China has over the U.S. as America’s largest foreign creditor has become a national pastime. It’s a bipartisan issue in Congress and a favorite subject among pundits lamenting the decline in U.S. influence around the world. But could China really use its Treasury purchases to shape U.S. policy? Diplomatic cables released by WikiLeaks and obtained by Reuters suggest that has already happened.

Emily Flitter’s special report outlines a diplomatic flare-up between the two superpowers following the U.S. financial crisis. Chinese officials said they were worried about the safety of their U.S. investments. U.S. diplomats worked hard to ease the tensions, but the conflict ultimately led to the request of a personal favor by a top Chinese money manager in a meeting with U.S. Treasury Secretary Timothy Geithner.

 

 

 

 

 

 

 

 

 

 

 

 

To read the special report in multimedia PDF format click here.

Paul Eckert has another special report out today based on WikiLeaks cables obtained by Reuters. This one sheds light on how the United States views China’s likely next leader, Xi Jinping. See that PDF here.

CHINA-SHANGHAI/CORRUPTION

5 comments

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I love Reuters. I don’t know how long this level of quality in reporting will last, but for now, you guys are among the very few doing this right.

Posted by ARJTurgot2 | Report as abusive

Consider if you will the power the bank has over your future/well being if you owe them trillions of dollars and need them to lend you more.
The Chinese will/does control the US without firing a shot due to the fiscal/ irresponsibility the US politicians wallow in.

Posted by ehross | Report as abusive

No worries mate, the us DEBT IS ONLY 25% OF TOTAL WORLD DEBT NOW-doesn’t include the 10s of trillion for unfunded entitlements, decades of forecasted record deficits, massive state problems and loan defaults galore-but who’s counting-charge it! We can’t even find the will to cut 2 weeks worth of deficit spendiing-you’re a finacial terrorist if you propose cuts!

Posted by DrJJJJ | Report as abusive

I hear Chinese like Tea parties!

Posted by DrJJJJ | Report as abusive

Don’t worry the over $250,000 a year croud is going to fix it. Congress said so. Anyway, it was still nice to see the US flag in the picture even though it appears to be slightly lower then our new one.

Posted by ROWnine | Report as abusive