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Trade imbalance and national debt.

May 15, 2012

Want to understand the trade imbalance with China and the national debt?

Tufts Economics Society

By Ker Zheng

These days it’s not uncommon to see news headlines saying that our public debt to China has risen to some astronomical amount and that each American household owes thousands of dollars to China. Now, you may be asking yourself, “What does this mean? I never borrowed money from China!” Well, to clear things up, the debt we owe to China is actually US government debt, a.k.a. US Treasury bonds that China’s central bank has bought up.  Today, China owns a disproportionately large amount of US government debt, currently amounting to just over $1 trillion.

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