China’s Conundrum

Mr. Zhao said that if China keeps running a trade surplus, which amounted to $22.3 billion in June based on the latest official data, it would have little choice but to keep buying U.S. Treasurys.

via S&P Downgrade of U.S. Puts Pressure on China to Spur Domestic Consumption –

…….. or remove the peg to the US dollar. Either action would be painful. (CT)