How Can American Government Pay Off Chinese Debts?

Mar 22, 2016
by: lancegui

When did Chinese start to buy American bond?

US government has borrowed money from Chinese government to fund the expenses. This debts are typically called bonds where the borrowing entity issues a paper saying that it is borrowing suppose a million dollars from the lending entity, for a period of 10 years. As a compensation, the borrowing entity will pay a 1% interest each year, which, in this case is 10 thousand dollars. After a period of 10 years, the borrowing entity will give the capital (a million dollars) back.

U.S. own Chinese government 1.3 trillion dollars

Japanese-owned debt doesn't receive nearly as much negative attention as Chinese-owned debt, ostensibly because Japan is seen as a friendlier nation and the Japanese economy hasn't been growing at an 8% clip year after year.

The first and most important is that China wants its own currency, the yuan, pegged to the dollar.

Chinese government own about 7% of American debts.

What is the consequence for Chinese to own such big debt?
When and how this debt started?
Why American government allow such big amount of money owned by other countries?
Can U.S. ever pay off the debts?