China's Dollar Problem

By Kenneth Rogoff
12 October 2009 @ 12:19 pm EDT

When will China finally realize that it cannot accumulate dollars forever? It already has more than $2 trillion. Do the Chinese really want to be sitting on $4 trillion in another five to 10 years? With the United States government staring at the long-term costs of the financial bailout, as well as inexorably rising entitlement costs, shouldn't the Chinese worry about a repeat of Europe's experience from the 1970's?

Copyright Project Syndicate, Reprinted with permission.

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