http://www.nytimes.com/2009/03/14/world/asia/14china.html?ref=business
China Worried About US Treasuries
China is one of the largest investors in US Treasury bills amounting to as much as $1 trillion. It has expressed concern, seeking reassurance that the US government will honor its commitments. China’s investment in the US economy is the largest of its kind in the world. Also, since the USA is its largest exporter, its fortunes are closely tied to the fortunes of the USA.
Recently, miffed at USA ignoring it on the run up to the G-20 summit, China has tried to create subtle pressure on the US. Maybe it is also concerned that trade barriers imposed by the US to protect the domestic economy will have a negative impact on Chinese imports.
In the current scenario, both countries are interdependent and China realizes that the value of its assets (in the US treasury bills) may plunge if it tries to sell off the large volumes it has in the market.
It is in the best interest of China not to exert pressure and co-operate with US efforts of revival for the safety of its own (read China) investments.
