Originally posted by fusionstorm:
China's our biggest creditor to begin with. Couple that with a not insignificant amount of real estate in major metros like NYC, SF Bay Area and LA benefiting from Chinese buyers, and we're talking about a recipe for a financial shock that would reverberate for a few years.
That's factually incorrect
The US tax payer is the largest creditor to the US Government. By almost a factor of 10. Treasury yields have been at such a historical low, countries are simply giving the US more near interest free money to maintain their dollar ratio. (This is also why you have such shitty pension/social security returns in recent times.) If china were to sell their entire portfolio of US debt, you'd see yields raise by a paltry amount. As long as the US Dollar is still the world's defacto currency, this will always be the case.
the Coast line real estate, while large, is also not a significant shock. It has very little actual causative factor that lead to a nationwide real estate devaluation seen in 2007.
The most prominent knock on effect is the inability of other trading partners to even match the manufacturing prowess that China and it's foreign holdings represents. It takes alot of money and time to build up the manufacturing capability state side and to W+A 's point, I'd seriously doubt anyone has the time nor resources to stomach such a huge negative return to do that kind of capital investment when they can't sell their products to what is one of the largest consumer markets in the world.
The reach is chinese manufacturing is wide and extension. Take smithfield, one of the US' largest supplier/distributor of pork products. There goes bbq'ing. Same goes for the vegans without a steady source of Soy and Soy equivalent products. That vegan diet is now going to be almost 5x more expensive.