The value of the dollar plunged by almost 50 percent against the euro in the years from 2002 to 2008 (it has since recovered part of these losses). China eagerly bought up U.S. government bonds during this period, even though it was consistently losing money on its investment. This history makes its sudden expression of concern about losing money on its dollar holdings so peculiar. This public expression of concern presumably has a political motive rather than reflecting the actual views of Chinese leader, which would more typically be expressed privately to their counterparts in the United States. The media should have pointed this history out to readers and noted how extraordinary it is that such a statement would be made in public. The public nature of the statement is the real news, not the supposed "worry" about the future value of their investments.
--Dean Baker
