Public concern with China's increasing political and economic might, coupled with our inability to get comfortable with the federal budget deficit (no matter its percent of GDP) are teaming up nicely to amplify anti-Chinese sentiment.
Few look favorably on China's role in our economy; this despite the inarguably positive impact it's had in lowered our cost of living (keeping domestic inflation in check, and in turn lowering our cost to borrow for everything from cars to homes).
I disagree. In fact, I believe we have China just where we've been moving (both politically and commercially) to put them for decades. Going back to Nixon, it was clear then that the Chinese were a very different brand of communist than their comrades to the north (for which they too held a distrust that rivaled our own...and still do to this day). Nixon understood the Chinese had been capitalists for thousands of years, and at the core of their Marxist push was a steely-cold and calculating plan; one that recognized no iteration of Jeffersonian democracy could leapfrog the better part of a billion people over the craggy and risk-ridden transition from agrarian to industrialized with nary a scratch. Anyone who's had the chance to take a gander at the awesome (and democratically-impossible scope of the) Three Gorge Dam (and the near 1.5 million people it displaced) can sympathize with the fact that sometimes tough and wildly unpopular decisions paved the way to more than one democracy (or republic as the case may be).
Yet fears of Chinese hegemony is increasingly influencing public opinion, in a mood that harkens back to the 1980's when, prompted by the fear-mongering media, many Americans believed Japan would surely overtake the US economically. Japanese xenophobia climaxed with the purchase of the Rockefeller Center and Radio City Music Hall in New York...what was next, The White House!?
Not many years would pass until, much like the Japanese economy, the very same company that triumphantly plunked down $900 million to own Rockefeller Center would walk away, selling their ownership for what they paid out of concern that it was a "losing investment" (its value today is in the many billions).
Fast forward to present day and, much like the Japanese love for American real-estate, the Chinese can't seem to get enough of our national debt. Or so the media would have us believe.
As a consequence, a significant percent of America's public today believe we have a dangerous reliance on China, oft citing Chinese and, to a lesser extent Japanese, purchases of America's nearly $16 trillion in our national debt as their chief concern.
The only problem with those headlines is the fact that they're just not true. While yes, the Chinese, Japanese and plenty of other foreigners do own meaningful percentages of US national debt, it's actually Americans themselves who buying up most of our treasuries.
Below is a fascinating breakdown of who actually "owns America" (in terms of how much US national debt is owned by foreigners) as of 2007 and, well, it sure isn't the Chinese:
Hong Kong: $121.9 billion (0.9%)
Caribbean banking centers: $148.3 (1%)
Taiwan: $153.4 billion (1.1%)
Brazil: $211.4 billion (1.5%)
Oil exporting countries: $229.8 billion (1.6%)
Mutual funds: $300.5 billion (2%)
Commercial banks: $301.8 billion (2.1%)
State, local and federal retirement funds: $320.9 billion (2.2%)
Money market mutual funds: $337.7 billion (2.4%)
United Kingdom: $346.5 billion (2.4%)
Private pension funds: $504.7 billion (3.5%)
State and local governments: $506.1 billion (3.5%)
Japan: $912.4 billion (6.4%)
U.S. households: $959.4 billion (6.6%)
China: $1.16 trillion (8%)
The U.S. Treasury: $1.63 trillion (11.3%)
Social Security trust fund: $2.67 trillion (19%)
So out of the $15+ trillion in national debt (which is a fraction of America's net worth), America owes foreigners only about $5 trillion of it…the other $10+ trillion is owned by us. For good or ill.
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