Future Politics: China

A pleasant surprise and confirmation of my imaginings this week: I read an article in The Atlantic Monthly entitled “The $1.4 Trillion Question” by James Fallows about the financial relationship China has with the U.S.  Over the last five years or so, other articles and reports have appeared in the media about the huge trade surplus China has with us and how China is investing that surplus into the U.S. economy, essentially helping to keep us afloat.  China is not the only foreign country that invests in the U.S.  Japan also has a sizable investment, Saudi Arabia and Russia among others.  How does this apply to Perceval?

Several years ago when I had reached the tenth or eleventh draft, it suddenly occurred to me that Japan had bought a lot of real estate in America so why couldn’t China have also invested heavily in our economy?  And then why couldn’t China threaten to cash in all its investments all at once and effectively trash our economy completely?  I decided that this could be possible theoretically and ran with it.  At the beginning of Perceval, talks organized by the EU and Russia are occurring between China and America in Vienna to persuade China not to cash in all its investments in America.  China has become nervous about the American economy because the social and political situations, from China’s perspective, have become unstable with a civil war, armed resistance, and states threatening to secede.  And China wouldn’t mind strengthening its position as a superpower.  Evan Quinn has a secret that threatens both him and the situation between China and America, and in the story, he must decide what he’s going to do about it.

In James Fallow’s article, he clearly describes how China has invested billions in the American economy to date, and as long as the dollar remains relatively strong, has no reason not to continue investing.  As he put it, “Without China’s billion dollars a day, the United States could not keep its economy stable or spare the dollar from collapse.”  He goes on to examine possible scenarios, and how unlikely it is that China would do anything to hurt us because it would hurt them through their dollar investments.  However, political tensions or global economic shifts could lead to China using this investment “weapon” to try to protect their position.  Not too far from what I’d imagined years ago…..

The entire article can be read at www.theatlantic.com/doc/200801/fallows-chinese-dollars.


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