The financial crisis: China's role - and responsibilities?

The superpower of the East (ouch - they really don't like the sound of that phrase in Washington!) is so big and so rich that it's just about everywhere nowadays. As the cash-strapped U.S. government's second-largest creditor after Japan, it would seem that China would or should have some cards to play in the completely unpredictable game and drama of the still-unfolding, banking-and-credit-crunch crisis that started in the U.S. and has spread and spread and spread around the world. Now, apparently, it may be ready to play some of them.

The headquarters of China's central bank in Beijing: Will China buy up billions of dollars more of U.S. debt in order to help Washington combat the deepening financial crisis?

» Inter Press Service, in a report published in the Asia Times (Hong Kong), reports: "The Wall Street fire-sale has prompted economic pundits in China and elsewhere to call on Beijing to snap up stakes in United States financial institutions and further China's influence on global financial power." Chen Jie, an economics professor at Shanghai Fudan University, commented: "China cannot easily afford to pass up such an opportunity....We have been anxiously trying to find investment opportunities for our financial capital, but before the crisis, there existed a myriad of visible and invisible barriers for Chinese investment overseas, particularly in the United States."

An investor watched stock prices on an electronic board in Hubei province, China, earlier this week; on Monday, China's stock market fell sharply in response to sliding share prices overseas and fears of a global economic slowdown

However, so far, "China's response to expectations at home and abroad has been unassuming. Although fortified with great liquidity and large reserves, Chinese banks and government investors have preferred to sit on their hands rather than go on a shopping spree of tumbling Wall Street firms....Chinese bank officials have dismissed as groundless reports that China plans to buy up to $200 billion worth of U.S. Treasuries to help Washington combat the deepening financial crisis....Some of Beijing's conservatism stems from the fact that the global credit crisis has walloped the value of the Chinese government's initial batch of investments in U.S. financial institutions such as Morgan Stanley and Blackstone Group."

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