Jerks!

As highlighted in this article, the Chinese government is expressing its concern that some countries might exit their stimulus programs sooner rather than later. As most loyal BBFiles readers can probably surmise, this posturing by Chinese officials is based less off of economic theory and based more off of self preservation.



There are two primary ways to stimulate an economy: fiscal and monetary. The Chinese will say anything and everything they can to keep other governments from stimulating the economy via monetary policies and the will say anything and everything to keep them stimulating the economy via fiscal stimulus.



This is a blatant self preservation tactic. The Chinese own a lot of our bonds, which depreciate in value when the economy is stimulated via monetary policies. Conversly, if the economy is stimulated through fiscal deficit spending than the bonds may appreciate in value. Moreover, the Chinese know that stimulus funds will reach Chinese companies through purchases of manufactured goods coming from China. Therefore, there are three reasons for why the Chinese will automatically say the USA should not reduce fiscal stimulus and none of them should be heeded by any reasonable economist!