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Originally Posted by Anti_Rice_Guy
China can't keep up what it's doing forever - it's causing inflation in its own country and making it so the average person there can buy less and less meanwhile enriching foreign citizens. Overspending in the US is helping keep the momentum of the vicious cycle going.
The way China keeps the Yuan devalued is by buying American dollars/bonds. We keep spending too much, thus printing more of them. What the Fed did recently with its quantitative easing was to try and cause a little inflation which would bring the value of the USD down slightly which when China owns trillions worth of USD, means a big hit. It's a matter of give and take.
1995-2005 China had fixed its Yuan - USD exchange rate by printing money and increasing its currency reserve to match the 1995 USD-Yuan level. It restricts the amount of foreign assets that locals can invest in.
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Not to mention the wealth gap in China is massive. That pot is nearing a boil.
It's bad enough that they can steal money right out of people's mouths with their lack of policing knock-offs and IP theft.