James Fallows, a correspondent for the Atlantic, has written an article entitled “The $1.4 Trillion Question describing the tenuous economic relationship between China and the United States. Former Treasury Secretary Lawrence Summers has aptly described the relationship as the “balance of financial terror”.
The most shocking aspect of the relationship is the sheer size of China’s reserves — $1.4 trillion and counting. To provide perspective, $1.4 trillion is enough to purchase all of the following companies outright:
- Microsoft ($302.57 billion)
- AT&T ($226.89 billion)
- Proctor & Gamble ($201.52 billion)
- Wal-Mart ($196.36 billion)
- Bank of America ($185.06 billion)
- Google ($170.19 billion)
- Coca-Cola ($135.08 billion)
In 2007 alone, China added $461.9 billion to its reserves. This was nearly enough to buy Exxon-Mobil ($463.64 billion). Imagine China buying an Exxon-Mobile every year.
Other countries also have large supplies of foreign reserves (Japan, the United Arab Emirates, and Russia are the runners-up per Fallows). What they do with them will have profound effects on the American economy.
April 15th, 2008 at 10:41 am
Don’t care too much about the amount of the reserves of China. There are lots of money which comes from the U.S.A. to China for profit in our stock market and real estate market. They greatly contribute to the reserve. China government has announced a ton of policies to reduce such investigation. As you know, your currency, US dollar are now suffering devaluation, it should be your concern.