Why China won't destory our economy

There's been a lot of bickering going on back and forth lately regarding the prospect of China unleashing a "nuclear option" in response to American efforts to force China to revalue its currently undervalued currency. China's threat involves selling off its vast stock of American dollars ($900 billion about) on the foreign markets, causing a plunge in the value of dollar. Spooky eh? Fortunately this won't happen, at least not at anytime in the near future. Why won't this happen? Because guess which nation is the number one export market for Chinese goods? That's right, America. China's astounding growth rates are fueled by its exports. If China dumps it's US currency reserves, the Chinese yuan rises meaning, goodbye 30% yearly growth in export markets and goodbye 11% yearly GDP growth. While China's economy is currently booming, a decline in growth--such as the one that would occur by selling off all of those dollars--would bring it crashing down. Poverty is still widespread in China and infrastructure is nowhere near adequate levels. China cannot afford to destroy its growth rates since economic growth is basically the only thing holding the country together. In essence, while the American markets would certainly by hurt by China's "nuclear option," for the growing Chinese market it would be a disaster.

Daily Telegraph
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