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China is hemmed in by its own domestic problems. The current government is being tolerated pretty much only because it has been able to deliver economically, but they will continue to need that 8% or so annual growth rate to keep all of the new urban middle and upper-middle classes happy. They like their cars and their TV's and their modern apartment blocks. Fail them, and they will be the ones to bring rural unrest into the major cities. Most of the time, China cannot reach its growth targets without using the US as its customer of last resort. In those cases, it will happily take even dollars it will not have any actual use for. It invests the leftovers mostly in US Treasuries, but also in US private debt and equities. That's the best they can do without risking the sorts of problems that they desperately don't want to have. As the article points out, recent news is news mostly because transparency in China is so much worse than it is here. From our point of view, this is not a major step by China, and it will not have major consequences. By the way, the TIC data for the end of December won't come out until next week...
...and home prices only go up.
Check's in the mail.
What's the other line that guys say about not doing something in one's mouth?
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