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> China is a gigantic investor in the USA. Whenever you hear the term "trade deficit" that the US has to China, there is an identical amount in "investment surp
by qeternity 9y ago
> China is a gigantic investor in the USA. Whenever you hear the term "trade deficit" that the US has to China, there is an identical amount in "investment surplus" that the US gets from China.
This is a bit of an oversimplification of how balance of payments resolves itself. For instance, their central bank (PBOC) has the largest FX reserves in the world. When we buy things from China, the seller can either keep USD to invest/purchase something in the US, or can buy CNY. To keep the CNY from appreciating too much and making Chinese exports uncompetitive, the PBOC sells CNY and buys those USD. They in turn use some of the proceeds to purchase US Treasuries. However they do this not because they want to invest in the US, but because they want to hedge inflation. So yes, your comment is true-ish, and global trade is an amazing thing, but it's a bit misleading to say every dollar sent abroad returns to "invest in America" in the typical sense that most people/HN commenters think of investing.