Is China Really our Economic Bogeyman?

During last week's first presidential debate,   Mitt Romney alerted us to the risk of borrowing from China to finance public television.   The China reference,  though, seemed to have gotten lost in the haze created by the dustup over the Romney threat to fire Big Bird.

This isn't the first time that Romney and his allies  have made apocolyptic-sounding references to China;  they seem to be  fond of  implying  that our economy and the American way of life will be laser-beamed to smithereens if China ever calls in its notes,  which is highly unlikely. (Do they really even care about the deficit and the national debt?  If so,  why do they insist on lowering taxes for the uber-wealthy and buffing up the military?).

  According to the United States Treasury,   about two-thirds of our national debt is held domestically.   However,  it is a fact that China is our largest foreign debtor.  But their portion of our debt is steadily shrinking in real numbers as well as percentage-wise.  Yep,  The Peoples' Republic of China is actually selling off some of its US notes;  as far as I can tell,  it's rated nary a whimper stateside,  in the markets or anywhere else.

Here are the stats:  China now holds $1.15 trillion of the United States'  debt as of July 2012  ---  in contrast to $1.31 trillion a year earlier,  a 12.5% drop.   This represents about 8% of our overall $16 trillion debt,  still a very significant amount,  but no justification for panic.  Again,  this is US Treasury data.

I'm not suggesting that there's anything trivial about the national debt or the deficit.   Both issues need to be addressed,  but in a humane manner.   In previous posts,  I've cited the proposals in the Congressional Progressive Caucus's budget,  as a relatively unhurtful way to eventually lead us toward fiscal solvency.  The CPC budget can be referenced  at budget for all 2013 .

At any rate,  for whatever it's worth,  I just don't envision any near-future economic action by China as fulfillment of a bad dream.   Fulfillment of said dream is more likely to occur if the President isn't re-elected.