Impact of China's U.S. Debt Holdings on U.S. Sovereign Power
Abstract
The U.S. national debt is the top national security issue facing the country today. In the past ten years, the U.S. debt spiraled to record heights and has largely been funded by China s purchases of U.S. Treasury securities. The creditor-debtor relationship between the U.S. and China calls into question the future of U.S. foreign policy independence. This paper assesses the likelihood and effectiveness of China using its debt holdings as leverage against U.S. foreign policy. This leverage is believed to be low because the impact to China itself is significant and such action would be counter to its economic growth strategy. Nonetheless, the scale of the U.S. debt and its projected growth requires action. The U.S. must take aggressive steps to reduce its debt. Additionally, it must temper its penchant for deficit spending to mitigate the risk of constraints on its foreign policy and more importantly to restore the foundations of U.S. power.
Document Details
- Document Type
- Technical Report
- Publication Date
- Mar 22, 2011
- Accession Number
- ADA552991
Entities
People
- William J. Edwards
Organizations
- United States Army War College