On Sunday, the influential Hong Kong daily Ming Pao quoted Beijing sources as saying the central government was ready to buy at least $200 billion more U.S. bonds to help China’s “economic partner” tide over difficulties.
The story was officially denied by the PBOC a day later. However, it is likely that the Hu leadership will continue to bail out the humbled financial super-power. This is despite qualms raised by respected Chinese economists that Beijing should spend its hard-earned forex reserves on assets with more high-yielding potentials.
After all, Beijing realizes that with Washington’s dependency on Chinese largesse growing by the month, the U.S. will have to reciprocate by, for example, not pressing China so hard on its huge trade surplus.
The CCP leadership also hopes that the White House and Congress will not object when China Investment Corp. (China’s sovereign-fund investor) and other state entities go about snapping up undervalued assets in the U.S. A recent attempt by the CIC to buy a large chunk of Morgan Stanley failed to come to pass.
More significantly, Beijing is elated over these and other developments that show up the “sole superpower’s” feet of clay.
In August, Beijing indicated its disapproval of the secession of South Ossetia and Abkhazia from Georgia — as well as Moscow’s backing of the separatist movements. However, the CCP leadership was ecstatic over the fact that Washington and NATO’s failure to intervene in Georgia signaled in effect, the end of the “global cop” role of the U.S., at least across vast swathes of the world.
Chinese sources knowledgeable about Hu’s foreign policy have pointed out that the 65-year-old, Fourth-Generation leader is much closer to the aggressive diplomacy of Chairman Mao Zedong — who fought repeated battles with the “American paper tiger” in the 1950s — than to the master reformist Deng Xiaoping’s conservative international agenda.
