one at Angry Bear and another at Brad Sester's blog.. Check also the comments, paericularly those by Dave Chiang in the second. One of Dave Ciang's comments:
"At this economic juncture, Chinese economic strategy in regards to its cache of US Dollar foreign reserves, is to minimize the damage to its economy when the dollar-centered global financial regime unravels. China is certainly recycling some of what it earns from trade surpluses to buy natural resources, companies, technology and oil wells abroad. But more investment flows are coming into China than are leaving it; this is what finances the factories that dot the Chinese landscape and the skyscrapers sprouting everywhere in its cities. Meanwhile, China’s current-account surplus translates into a vast build-up of dollar holdings. Whatever else China’s leaders may think about the United States, they can have no illusions that the dollars they have accumulated can ever be redeemed for anything close to their current purchasing power values. The Chinese also hope that when the dollar-centered global financial regime unravels, they will have an economy sufficiently developed to withstand the economic shock. With booming inter-regional Asian trade, unless the US Economy plunges into a depression, the continental Chinese economy is rapidly rising to the critical mass for self-sustaining domestic growth. That will allow it to deal with the collapse in American purchasing power when the US is finally forced to live within its means. The political fallout is another question entirely. The collapse of the dollar will take with it the US global hegemony project; the United States will be hard-pressed to sustain its global military reach in a world where it must earn euros or yen to pay its foreign creditors rather than print more Federal Reserve paper."
