“China holds the majority of our national debt.” Wrong. “We are so tied in with China… that (they) are now taking the U.S. market down.” Wrong again.
Photo: Investors viewing stock prices. (Courtesy of Rafael Matsunaga/Flickr)
The biggest takeaway from massive swings on Wall Street and global markets this week is simple—Americans think China is much more important to our economy than it actually is.
Leaders and politicians have exploited the rise of Asian economies for political gain regularly over the past two decades. The consequence of political exaggeration reared its ugly head this week with market volatility unseen since the depths of the 2008 financial crisis.
American attitudes toward China are driven by misrepresentation. A majority of both Democrats and Republicans think that 50 percent of the national debt is owned by China. In fact, Americans own almost 70 percent of federal debt. China owns about 7 percent, and Japan is our largest foreign creditor.
Headlines that highlight the “record” amount of U.S. debt owned by China, like this one from FOX Business, perpetuate the falsehoods many Americans believe to be true.
The blame is just as bipartisan: President Obama attacked George W. Bush for “(taking) out a credit card from the Bank of China in the name of our children” during his 2008 campaign.
Statements from major political figures, like the “we are so tied in with China and Asia that their markets are now taking the U.S. market down” tweet Donald Trump sent just after the Dow dropped by 1,000 points on Monday morning, certainly don’t help to quell potential panics.
“You have these geopolitical events, and the market overreacts,” Whaley said. “The only event we have going on to my mind is China… I think the market’s simply overreacting.”
Marketplace has done an exceptional job covering the market’s wild ride this week. Sabri Ben-Achour, who reports on Wall Street, produced a segment on Monday titled “Stop worrying about China.” And on Wednesday, they reported that Chinese citizens “aren’t that worried” about the market plunge, which has been much worse in China.
Since politicians won’t take responsibility for misleading the public about China, individuals and news media must take the lead. Starting now.
China can’t call in our debts, take over American businesses, or tank our economy.
Remember that the next time traders are panicking over a problem on the other side of the world.
Zac Bears can reached at firstname.lastname@example.org.