When U.S. President Barack Obama’s choice for Treasury secretary, Tim Geithner, talked tough on China’s exchange rate policy during his confirmation hearing, Wall Street traders got the shivers. Geithner accused the country of currency manipulation, sparking concerns that Chinese authorities might react by scaling back their investments in U.S. Treasurys. The fears, which drove down the price of Treasury debt slightly, are certainly understandable. Last fall, China took over Japan’s position as the largest foreign holder of U.S. government debt. Is the country’s new creditor status transforming China into a major world financial power? Many assume the answer to be yes. The West — and the United States in particular — is borrowing more than ever, leaning on China more and more to foot the bill. President Obama arrives at the White House pushing an $800 billion-plus stimulus package to pump up a flailing economy. Loans for that stimulus package may well increase the $652.9 billion in U.S. Treasuries already held by China as of October 2008. In December’s Atlantic Monthly, Gao Xiqing, who oversees a portion of that debt for China’s government advised the United States to ‘Be nice to the countries that lend you money.’ It is […]