2. Devaluing ones currency and and encouraging another country to appreciate their currency to improve imports is a form of protectionism.

3. China's low exchange rate keeps Chinese made product price low and imports strong.

4. China per capita wealth is 10% of the US

5. China owns $898.4 billion in treasuries

6. How does China sell of US bonds help the fed with quantitative easing? Bond yields would rise, government costs to borrow would increase, and government spending would slow. Obviously, Krugman errors in his logic. Krugman says a sell off of some US bonds by the Chinese would reduce the risk of liquidation pricing in a panic. Why would investors buy cheap dollar assets? Is Krugman hoping for a price collapse that will allow the rich to scoop us asset cheaply?

7. An Undervalued yuan transfers wealth from households and subsidizes Chinese manufacturers. The Households are forced to subsidize production and investment. China sacrifices its household wealth to gain position in the global economy.

8. Revaluation of the yuan return wealth to the households and reduces manufacturing subsidies and household can consume more goods.

9. The subsidizing of Chinese manufacturer meant US companies must compete at lower profit margins to keep their product prices competitive with Chinese products

10. American's over consumed and Chinese households over saved until trade limits became too excessive.

11. As Chinese manufacturers lose its subsidies it will rely more on Chinese consumption. Many Chinese manufacturers will find themselves unable to compete facing bankruptcy.

12. China exports must find markets in Latin America

13. If the rembimni appreciates than the US trade deficit will decrease. Chinese households will consume more and invest more broadly. Dim Sum bond buying will increase and yields will decrease. Wage growth will be restrained

14. The devaluation of the yen will not reduce trade deficits. A contraction in China trade surplus does not necessarily mean a contraction in the US trade deficit. US consumer could maintain consumption levels of Chinese goods.

15. As Chinese producer become less competitive, non Chinese manufacturers will increase exports to China and increase sales domestically. China economy will slow if it can not maintain competitiveness against Japan, Germany, and the US.

16. A rising rembimni will take pressure off a devaluing dollar. Germany could benefit from a devaluing euro resulting from an appreciating yuan. (http://www.mpettis.com/2010/03/17/how-will-an-rmb-revaluation-affect-china-the-us-and-the-world/) 17. Japan sells China unfinished goods in yen. Japan and China creates currency swaps between the yen and rebimni pushing the dollar out in part. China buys unfinished goods at a discount giving Chinese manufactures a subsidy. China then sells the finished goods to the US. The US buys more finished goods from China than all other countries combined. China expands its distribution of finished goods by finding new markets in latin America and Africa. US consumption of Chinese goods remains strong and the trade deficit does not decrease.