U.S. Debt Downgrade Leaves China in a Bind

At Los Angeles Times:

The Chinese government has built what is now the world's second-largest economy in part by keeping its currency cheap in order to subsidize exports. To do that, it has bought gobs of U.S. Treasury bills and other securities. Any big move on China's part to unload its $1.2-trillion-plus trove of American debt would only result in a self-inflicted wound: sinking the value of the dollar further and eroding the value of its own reserves.



For the moment, at least, the economic and political consequences of dumping dollars are likely to keep Beijing from taking any such drastic action.



"There really isn't a better choice than U.S. Treasury bonds," wrote Huang Yiping, professor of economics at Beijing's Peking University, in a commentary published Monday in the influential financial magazine Caixin. "The basic requirements for foreign reserves are safety, stability in value and liquidity. Although U.S. Treasury bonds might not meet the first two criteria right now, the problem is still that we do not have a better choice."

Authorities Shut Down San Gabriel 'Birthing Tourism' Maternity Center

This ought to feed the debate on birthplace citizenship. And these women are Chinese!!

At LAT, "'Birthing tourism' center in San Gabriel shut down":

From the outside, they looked like other recently built San Gabriel townhouses — two stories, Spanish style, with roofs of red tile.

Inside they were maternity centers for Chinese women willing to pay handsomely to travel here to give birth to American citizens.

Southern California has become a hub of so-called birthing tourism. Operators of such centers tend to try to blend in, attracting as little attention as possible.

But on quiet, residential Palm Avenue, neighbors had noticed an unusual number of pregnant women going in and out, and some complained about noise.

On March 8, code enforcement officials shut down three identical four-bedroom townhouses functioning as an unlicensed birthing center.

Competitiveness: A Dangerous Obsession? Or Just Too Pro-Business?

The main story's at LAT, "Obama Touts U.S. Innovation in State of the Union Preview." And at NYT, "Obama Urges U.S. Competitiveness Ahead of Speech."

What's interesting about this is how progressives are quick out of the gate attacking the agenda. You've got Robert Reich, who was President Clinton's Secretary of Labor, with "American Competitiveness, and the President’s New Relationship with American Business." And by some really bizarre tricks of witchcraft, Emptywheel is able to turn Reich's attack on the agenda as a diatribe against the military industrial complex. Seriously. "“Competitiveness” Is Peace":

If we want to be competitive ... we have to stop wasting so much money on our war machine and instead invest it in our own country.

This, for want of a better phrase, is rank unadulterated bullshit.

That said, you gotta love Paul Krugman's piece, "Competitiveness." Krugman's mostly just agreeing with Robert Reich. That is, the attacks on Obama's agenda are mostly attacks on American business, which is the enemy of the progressive left. The administration is way too cozy with Wall Street and the big corporations like GE, and it drives lefties crazy. What's interesting is that Krugman links to his one-time classic article at Foreign Affairs, "Competitiveness: A Dangerous Obsession." Published in 1994, the piece was a big deal at the time, since it broke with the orthodoxy on the epic challenges of head-to-head competition with Japan. And the actual analysis is straightforward, that nations are not firms, and the problems of competitiveness arise from a range of factors beyond mere worker productivity, currency values, and high value-added manufacturing sectors. But I'll leave that to the economists (and Krugman was a respected economist on one time). What's so funny about Krugman is what a sexist troglodyte he is (or was back in the day). I'll never forget how he spoke of Laura D'Andrea Tyson as President Clinton's "Chairman" of the Council of Economic Advisors:

Most writers who worry about the issue at all have therefore tried to define competitiveness as the combination of favorable trade performance and something else. In particular, the most popular definition of competitiveness nowadays runs along the lines of the one given in Council of Economic Advisors Chairman Laura D'Andrea Tyson's Who's Bashing Whom?: competitiveness is "our ability to produce goods and services that meet the test of international competition while our citizens enjoy a standard of living that is both rising and sustainable." This sounds reasonable. If you think about it, however, and test your thoughts against the facts, you will find out that there is much less to this definition than meets the eye.

Laura Tyson is, of course, a woman. I guess that didn't occur to Krugman, or the editors at Foreign Affairs, for that matter. More recently, Christina Romer served as "Chair" to President Obama's Council of Economic Advisors. But by 2008 most media commentators spoke appropriately of Romer as the "chairwoman of Pres. Obama's Council of Economic Advisers."

My how times change.

It's good for a laugh, in any case. And big time radical progressives like Paul Krugman and Firedoglake's Marcy Wheeler come off looking like dolts one more time.

Here Come Chinese 'Trophy Acquisitions' in the U.S.

In 1989, the editorial board of the New York Times asked, "Is the transfer of American assets to Japanese ownership something to worry about?"

The answer was no, "of course." But the Times board when on to suggest that this was "a sharp reminder of Japan's growing economic strength." So true, but within just a few years, by the mid-1990s, those fears of "Japan as Number One" quickly dissipated as that nation floundered in the fallout from its overheated bubble economy.

I'm reminded of this by the news this morning that China's Industrial and Commercial Bank of China Ltd. (ICBC) has made a bid for ownership entry into the U.S. financial market. See WSJ, "China's ICBC Bids for U.S. Entry":

CHICAGO—Industrial & Commercial Bank of China Ltd. on Friday signed an agreement here to acquire a majority stake in Bank of East Asia Ltd.'s U.S. subsidiary, becoming the first state-owned Chinese bank to make an acquisition of a U.S. deposit-taking institution.

The deal, signed on the last day of Chinese President Hu Jintao's state visit to the U.S., represents what could be the start of big expansions by Chinese financial institutions in the world's largest economy.

The deal comes as both Beijing and Washington are calling for greater commercial ties between the two countries. China is prodding the U.S. to ease its export controls, especially those involving high-technology products, while the U.S. is asking for more Chinese purchases of made-in-America goods and services.

Still, the Bank of East Asia transaction promises to be carefully scrutinized by U.S. regulators, including the Committee on Foreign Investment in the United States, known as Cfius, because of the state-controlled nature of ICBC, China's largest lender. Bank of East Asia is a publicly traded bank based in Hong Kong.

RTWT.

And also at WSJ, "Why China’s ICBC Bank Deal is Important."

The Chinese are coming to America. And we'll soon see, no doubt, some "trophy acquisitions" that raise hollers far and wide. But as we've learned from previous experience, this hardly means the end of American world preeminence.

In any case, Daniel Drezner has a roundup on those "writers who vastly exaggerate China's rise!" See, "The most absurd edge of the 'China as behemoth' meme."

Related: Paul Krugman on China (via Memeorandum).

I'll have more later ...