China now holds roughly $1 trillion of U.S. Treasury and other government backed bonds. China now owns nearly one out of every $10 in U.S. public debt which U.S. Senator Jim DeMint says puts the country squarely behind the eight ball when it comes to future dealings with the Far East nation and other countries.”They’ve expressed the fact that they are losing confidence in the dollar. If they don’t lend us money, there’s probably no where else for us to get it. They have been making us loans because we have been buying so much from them, but that trade deficit has declined because of our economy. If China could shift to another currency standard, which they are already talking about, I think we would find ourselves in trouble.”
DeMint and other critics of the Federal government’s borrowing habits say that the more China invests in U.S. debt, the harder it becomes for American companies to sell their products overseas.
DeMint says as the Fed continues to borrow from China and other countries it is not only mortgaging the future of America’s children, it is also leveraging its ability to have a significant influence on foreign policy.
“I think it has a lot to do with us not enforcing our trade agreements as aggressively as we should with China. I think it has everything to do with why we don’t have a harder line against Saudi Arabia for supporting terrorism because they’ve loaned us money. I think our hands are tied behind our back because we’re a debtor.”
DeMint’s fellow Palmetto State Republican in the Senate Lindsey Graham says despite the view of Treasury Secretary Timothy Geithner, the truth is the Chinese manipulate their currency. Graham co-sponsored a 2007 bill that would have allowed U.S. companies to ask for steeper tariffs against goods coming from countries found to have misaligned currencies. Another sponsor of the bill, Democratic Senator Charles Schumer of New York may reintroduce the measure.