China Says It Is "Worried" About Its Loans to the United States – Follow-up

I wanted to clarify one thing from Friday’s post. When I said we do not need to worry, at least much, about the $1 trillion we owe to China, I was talking domestically and econmically. Certainly, having a debt this size is a concern, but I do not think it matters very much for our economy to whom we owe it. If we owe it to China, we might have to continue to let in more Chinese imports than some would like, but I wouldn’t consider that a minus. Domestically, that is probably about the only effect most of us would feel.

But foreign policy could be different. As I mentioned in my prior post, our debt to China will probably mean that there may be some positions on certain issues that we will not be able to support. Human rights issues, for example. But some people don’t think those things should be a big priority in any case. They feel we need to look out for ourselves and work with the world as it is. If that is your viewpoint, the debt to China won’t affect things much.

But for those who think it is important to stand up for human rights, there may be a problem. We may be limited, or at least feel we are limited, in some ways in what we can say and what we can do.

Ultimately, whether you see the $1 trillion we owe to China (and all the more we are going to borrow from them over the next few years) as a problem or not, will depend on your view on issues such as this.

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Update (3/15/09 9:35 p.m.):  I slightly changed the last paragraph to more clearly say what I was trying to say.  It previously read as follows: "Ultimately, whether the $1 trillion we owe to China (and all the more we are going to borrow from them over the next few years) is a problem or not, will depend on issues such as this."