HOW MUCH DOES THE US DEPEND ON CHINA?

AMERICA'S CHINA SYNDROME

Kevin Rafferty

The Japan Times, January 28, 2012

HONG KONG — How much does the United States depend on China's willingness to buy U.S. treasuries to pay for American profligacy? How much do spendthrift Americans rely on China to feed their greedy habit for cheap consumer goods? If you were to ask the average American, and probably the average world-aware Chinese, you would probably get a high number, say 40 or 50 percent — surely not below 20 percent.

The correct answers are so low as to make you blink. China, including Hong Kong, holds about 7.5 percent of U.S. treasuries totaling $14 trillion, according to calculations based on U.S. Treasury reports. China's share of U.S. consumption expenditure is just 2.7 percent based on "Made in China" imports. If you think that's low, the actual figure is lower, a paltry 1.2 percent if you strip out the value of the work done in the U.S. to put "Chinese" goods on American shop shelves.

These figures should make politicians and opinion-makers think hard about the implications of the way in which they approach economic relationships. The lessons are that they need to be more careful about slinging mud about unfair trade practices or demanding protection.

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