China’s Financial Power
America and markets generally were relieved when China’s State Administration of Foreign Exchange (Safe) announced that it would not be dumping U.S. assets in a programme to diversify its foreign exchange reserves, the largest in the world. It said such a move was unnecessary. However it called upon the U.S to ‘genuinely take measures to protect investors’ interests and confidence as a responsible large nation’. In other words get a grip of its budget deficit and burgeoning debt. This is not quite the tune the Obama administration officials were playing at the G8 and 20.
What is truly remarkable, in the historic context, is that China said it and notice has to be taken. Even if the U.S. government knows that economic power has shifted irrevocably to Asia, the American people do not. Yet.
What is even more astonishing is the spectacle of the world’s leading capitalist power being lectured on financial good housekeeping by the world’s leading communist power, which seems to be able to operate a better model of capitalism. As a great trading nation we need to wake up. Definitely the sun now rises in the east.