[jeffkrol]

I've have just been reading articles by this gentleman. Very interesting takes on China, all around.... thought I would share:
Also sprach Analyst: World Economy, China, Investment, Real Estate
What if China stops buying US Treasuries?

So is it time to panic that China is finally dumping US Treasuries? Is it time to panic that no one is funding the US government deficit?

No.

The very definition of balance of payment accounts mean that if China stops buying US Treasuries and no one else outside the US is taking up the slack, the capital account surplus of the US will shrink, and will probably become a deficit when everyone else sells US assets, and that implies that, on the other side of the balance of payment, current account deficit will shrink, and will probably become a surplus when everyone sells US assets. That has to happen, by definition.

If that extreme thing happens, oddly enough, it means the US will run a trade surplus.

And let’s go back, once again, to this equation:

(S – I) + (T – G) = (X – M)

This equation says that private sector net saving and public sector saving must equal to more or less the current account surplus. In the past many years, the US has been running a negative current account, which means that the left hand side of the equation has to be negative. In Bill Clinton’s presidency, it was the private sector net saving which became negative, implying that Americans were taking more debts. As government budget surplus turned into deficit during Bush’s presidency, both private sector net saving and public sector net saving were negative. After the financial crisis, however, as the government deficit increased substantially, private sector is finally saving money on a net basis.