When outgoing American ambassador to China Gary Locke wished 700,000 followers on Sina Weibo a happy Chinese New Year (registration required), he received an overwhelming response: Pay back the money you owe us.
Internet users are fond of reminding Locke that China is America’s largest foreign creditor, reflecting the unease that regular Chinese, as well as some officials and economists, feel about the increasingly inextricable links between the two economies. China now holds a record $1.317 trillion in US government bonds.
One commenter said, “If America doesn’t pay back the money, this is using money to raise a dog that bites,” seemingly alluding to competition between the two countries. In theme with celebrating the year of the horse, several told the ambassador to ma shang, or immediately, return the money,” ma, being a homonym for the word “horse” in Chinese. Another responded to Locke’s well wishes with: ”Happy New Year. Pay back the money, pay back the money, pay back the money…”
During the US government shutdown last year, Chinese economists questioned how much China should be at the whims of American political gridlock and risk of default. In November, a Chinese central bank official said it was no longer in the country’s interest to build up its foreign reserves, and that China would cut back on its dollar purchases. China has been buying US treasuries as a way to control the value of the yuan, but as officials pledge to intervene less in the currency, that may become less necessary.
But another consideration, according to David Li, a professor at Tsinghu and former adviser to the Chinese central bank, is diplomatic ties. “The only explanation for the Chinese government’s interest in Treasuries is its relationship with the US,” Li wrote in an editorial in October. “China’s holding represents both a “hostage” scenario and a bonding instrument for the two largest economies in the world.”
One blogger said, “If America paid China back earlier, Sino-US relations could improve. Comrade, Locke, why don’t you help nudge them along?” Given that Locke is soon to leave China and will be replaced by US senator Max Baucus, who voiced some strong criticism of China during his confirmation hearings this week, it’s probably a little late for all that.