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Thursday, November 13, 2008

China's Stimulus Plan

Over the last three years, China has increased its foreign currency reserves by about $700 billion dollars of this about $400 billion is in dollar denominated assets. From 2006-2007 the increase in China's US currency assets rose $220 billion.

With its announcement that China is to invest in its infrastructure some $568 billion (China Announces Sweeping Plan to Aid Economy. New York Times, Monday, November 10, 2008:A1, A8), it seems that the US may have great difficulty borrowing from China to fund its current wars, the $700 billion bank bailout and the other necessary bailouts that will likely require an equivalent amount. And then there is the much needed stimulus package of about $300 billion.

Who and where are the lenders that will step into the gap?

Sent to the New York Times

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