China vs USA and why it matters to us

China vs USA and why it matters to us

Bernard Hickey looks at the key tension in the global economy right now: Amercia's need for China to keep buying its bonds and funding its recovery plan. If China stops buying or even starts selling its US$1 trillion of US assets then global interest rates will rise and the US dollar will fall.

Barack Obama seems to think "˜deficits don't matter' in a world where the US dollar is still the reserve currency. China might prove him wrong, and perhaps we should applaud the Chinese if they do.

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