1) China, unlike the US and Europe, doesn't give a shit what it's people think. The leaders are doing some 100+ year plan to make China the next superpower, instead of the 2-year plan (which favors short-term goals and appeasing special interest groups at the expense of the greater economy) that politicians in the US do. In general, I think the economy is efficient without government intervention, it appears that China may have the better government for long-term success relative to the US (given the current Liberalized government we have today).
2) China owns a ton of debt from the US and first world nations. They can "politically leverage" that debt for their benefit. Imagine a recent college grad who borrows money from his parents and relies on new debt from his parents on a regular basis. Those parents have strong control over their kid and what he does, simply by threatening to cut him off from future borrowing.
3) China has a lot of people, a lot of resources, a lot of land mass, and manufacturing capabilities. We can no longer manufacture anything in the US because it's not economically feasible to do so under OSHA, EPA, and union standards.
4) China is artificially debasing their currency, keeping it weak, to allow for a better exports economy.
What if China decides:
1) Fuck it, not going to let the US borrow money anymore.
2) Fuck it, not going to debase our currency any longer, going to let it increase, and then OUR PEOPLE can afford to buy the stuff we manufacture and produce and we won't need to export any longer so it doesn't matter if we're too expensive relative to other currencies to export things
Think about what China is doing:
1) Temporarily keeping their currency low to allow for an export economy to build up their internal infrastructure and economy. US (and first-world) investors are flooding China with money to buy factories and machinery and put the resources into training Chinese citizens into doing jobs.
2) Letting other countries borrow money so that it can exert political influence over them to do things that are beneficial to China in the long-term, that First-World "Democratically-elected" Politicians don't realize or think through the implications of because they are short-term thinkers (much like CEOs worrying about quarterly earnings at expense of 10-year returns).
At a certain point, first-world countries will have helped built up China to the point where China doesn't need to export and would better its citizens by raising the currency and keeping their things in-country. Without being able to borrow money from China, the US government would be forced to make up the loss by printing more money, resulting in inflation (and an even weaker USD to Chinese Currency), which means China can import things from the US (like agriculture products).
As the US Economy goes into recession, the US uses less oil and other raw materials, thus pushing the global supply of those materials up, and driving the costs down for China.
It's win-win-win in the long game for China.
The Chinese National Bank in NYC allows you to buy up to around $10k USD worth of Chinese Currency each year. There's limits and they won't let you get too much.
As much as I am trying to avoid VP speculation, it seems like China may be poised to fuck us over in 10 to 20 years and this may hedge against that. Then again, gold will likely sky rocket in that situation, at least relative to the USD, so I can buy some things in the US more cheaply (using my gold profits), although gold may not skyrocket relative to Chinese currency and if China is buying up global resources, then gas and food may go up just as much as the Gold:USD ratio does.
Or maybe if I was born 40 years earlier, I'd be saying the same thing about the Soviet Union and now holding onto worthless Soviet bills?
In all seriousness though, I don't think that's the case and I can't imagine China not being the next superpower and having their currency to USD skyrocket when that happens.edit to hide language
U.S. manufacturing is a powerful and major force in the world economy.
