ORLANDO, Florida, Jan 25 (Reuters) – A gradual financial
disentangling of China and the United States after decades of
symbiosis may reduce fears of ‘mutually assured financial
destruction’ but also harden divisions in an increasingly polar
global economy.
Whether one or the other suffers more from that separation
is under the microscope right now. But the mutual threat –
especially China’s U.S. bond holdings – looks far less potent
than once assumed.
Since China’s return to the global economic stage in 2000,
the wave of U.S. corporate and banking investment in the country
was seemingly matched by China banking windfall savings from the
resulting export and growth boom back into U.S. Treasury bonds.
Channeling the old Cold War thesis of a stable nuclear arms
rivalry, some saw ‘MAFD’ and the resulting inter-dependence as
binding the two together and preventing any sudden fracture in
the…
