It’s hard for many
individuals to believe that a leading country like the U.S. could be dependent
on China. If you’ve been following closely with the doings and spendings of the
United States, you’ll see how this has come to take place. First off, America
has a very bad spending habit. We are in debt so high that not many people see
how we can get out of it. The United States is debt spending and a lot of
important holders of Treasuries are in control of whether the U.S. will be
charged higher interest rates or not. If America isn’t careful, they could risk
the Treasuries dumping their holdings altogether, which would cause the value
of the dollar to plummet. Right now, this type of spending has pushed the U.S.
to depend on Russia, China and Gulf States.

Then the doings of the U.S.
has created great ties with China. The economic relationship that the two
countries hold is probably the most important in the world right now. This was
definitely the case when it came to the trading of goods, but now it seems this
tie has a great influence on monetary policy also. Two years ago, expert Martin
Wolf said that the party is over for the U.S. when Beijing says it is. With
that being said, you can imagine how deeply the U.S. and China are tied.

This tie deepened when China
and the U.S. established the Strategic Economic Dialogue, also known as SED.
This was created during the President Bush and President Hu Jintao era in 2006;
it is now known as the US-China Strategic and Economic Dialogue. Yes, the two
have plenty of dialogue on global warming and such, but the bigger picture
still points to the U.S.’s large budget deficit and China’s necessity to
stabilize the yuan. Now, China is forced to buy dollars, even as the value of
the dollar is decreasing. Now, President Obama will have to present and sell a
policy to the Americans, Congress and China. The economic contraction will
cause turmoil and uncertainty and China sees this. For the U.S. China is too
big to ignore, and for China America is too big to fail. Looks like money does
make the world go around.

Robin Trehan, is associted
with private equity group of Credit Capital Funding.  More information www.LatestBusinessReport.com