China must punish US for Taiwan arm sales with 'financial weapon'

Now is the time for China to use its "financial weapon" to teach the United States alesson if it moves forward with a plan to sale arms to Taiwan. In fact, China has neverwanted to use its holdings of U.S. debt as a weapon. It is the United States that isforcing it to do so.

The U.S. House of Representatives just passed a debt ceiling bill on Aug. 1. On thenext day, a total of 181 members of the House of Representatives signed a letter sentto U.S. President Barack Obama stating that the federal government should approvethe sale of F-16 C/D fighter jets to Taiwan as soon as possible to help ensure peaceand stability across the Taiwan Strait.

The U.S. Senate passed the debt ceiling bill on Aug. 2, and Obama signed it into law.Shortly thereafter, the U.S. Treasury obtained the authorization to issue 400 billion U.S.dollars in new debt. Will China become the largest buyer of U.S. debt again?

Despite knowing that major creditor countries, especially China, would be the mainbuyers of its new debt, certain arrogant and disrespectful U.S. Congress membershave totally ignored China’s core interests by pressuring the president to sell advancedjets and even an arms upgrade package to Taiwan.

U.S. treasuries will lose value if China stops or reduces its purchases of them on alarge scale, which will also affect the value of China's U.S. treasury holdings. However,as the situation has gotten out of hand, allowing Washington politicians to continuetheir game might lead to more losses.

U.S. arms sales to Taiwan can only create more jobs for the United States but cannotimprove the ability of Taiwan's military force to compete with the Chinese mainland. Theessence of the problem is that some U.S. Congress members hold a contemptuousattitude toward the core interests of China, which shows that they will never respectChina. China-U.S. relations will always be constrained by these people and will continuealong a roller coaster pattern if China does not beat them until they feel the pain.

Stopping or massively reducing U.S. Treasury bond purchases will certainly bringlosses to China to a certain degree. China must try to reduce the loss and transfer thepassive situation to an active one. China should consider how to build a direct linkbetween the U.S. Treasury bond purchase and U.S. domestic politics while adoptingmeasures to gradually adjust the structure of China's foreign exchange reserves.

For example, China can directly link the amount of U.S. treasury holdings with U.S.arms sales to Taiwan and require international credit rating agencies to demote U.S.treasuries to force the United States to raise interest rates. China can also launchlimited trade sanctions to the states of those U.S. Congress members who vigorouslyadvocated arms sales to Taiwan to affect their employment.

Because it is the money of the people earned through hard work, China is not willing toarbitrarily use U.S. Treasury holdings as a weapon. However, China has no choice butto use it as a weapon to defend itself when facing threats to China's sovereignty.

People's Daily

hostgator coupon 2011