Wen, Win Situation: China Reserves Hit $2.85 Trillion

Can You Count To $4 Trillion?*

China's currency reserves continue to grow. They were $1 trillion in 2006, $2 trillion in 2009, and may approach "$3 trillion sometime this year", according to UBS (Bloomberg). If we assume that it took pretty much all of Chinese history through 2006 to accumulate that trillion, well, their rate of growth is ridiculous. Ridiculous good, if you are Chinese, and cause for concern if you are pretty much every place else. Kind of hampers your ability to think clearly when you are also on the hook for preventing the forced reintegration of one of China's provinces into China proper.

At the rate they are going, their reserves should hit the size of the U.S. national debt sometime around Christmas, upon which they can buy up our notes and debt and forgive it all, allowing us to use our sudden financial jubilee to buy even more Chinese holiday goods. A win win. Or Wen Win. Yuan win.

We jest. The problem is less about China, as rising growth and opportunity there will be a great boon for American commerce and ingenuity, as well as an engine to jump start far corners of the earth. The problem has more to do with the United States facing its own demons (budget imbalances, spending growth rates, tech investment). It's like we are the fat person, and begging the plastic surgeon to cut his fees and do bariatrics instead, and while simultaneously cheating with that surgeon's wife (Taiwan).

Gains in China’s currency holdings highlight global economic imbalances and claims that the yuan is undervalued, topics President Barack Obama has put on the agenda for his Jan. 19 meeting with counterpart Hu Jintao in Washington.

(Bloomberg)

At least we know that one of our semi-friends has some money and will be able to float us a costly payday loan down the road if we don't get our finances in order.

*("No because you Americans suck at math," says Chinese Premier Wen Jiabao, and who, according to Wikipedia, is the architect of China's current economic policy).