This week in China: Mild panic

While the usual collection of Chinese obsessions from the land of the free and home of the brave – luxury goods, basketball and hip-hop – appear to retain their lustre, the US government’s fiscal management does not. Following repeated downgrading of the US’ credit rating, the first public intimations of panic from Beijing surfaced this week at the realization that they may have stuck all their change in the wrong piggy-bank. Of course, when the custodians of that piggy-bank are busy politicking, and seem set to devalue your hard-earned change, this makes the panic understandably more acute. However, panic and policy are two very separate things, and debt default or deliberate devaluation remain highly doubtful scenarios, despite Jim Rogers’ talk of imminent financial apocalypse. And China must tread carefully too. The mere whisper of divesting of some of its US holdings was enough to send the dollar plummeting. As the saying does not quite go, with great power comes great responsibility and do not put all your eggs in one basket and whatever happened to that IMF reserve currency, anyway?