It describes a dollar trap. Where China is kinda stuck with its savings and it cannot fuck the dollar up or it will fuck up 70% of its own reserves. So they need to support the dollar bubble. They do so by buying US treasuries. This makes the US Treasuries market one of the most liquid on the planet. Which is a good thing, from a peace on earth standpoint, because everyone is sort of in the same boat.
However the Chinese seem to have found a protectionist way to resolve imbalances. By having state owned monopolies spending their dollars to acquire competitors abroad. Unfair competition I say!
From the FT:
Over the long term, Beijing hopes to reduce the size of its enormous reserves and cut exposure to US Treasury bonds by encouraging state-owned enterprises to use foreign exchange to acquire competitors abroad.
Got it? Can they be clearer in their intentions? Economic war has been going on for years it seems. The paper money that was accumulating were claims on produce and capital. When the produce is not enough to settle claims, e.g. when we consume at 103 and produce at 100 over a sustained period of time, then we got to settle with capital and that means selling bits of corporate america. On the cheap.
Keep in mind that america inc produces 14T per year. If that is growth of 3% which means the mass is at 500T. 2T per year for 5 years (end of crisis?) means 10T means 2% of america, max, has changed hands. Over 5 years. So there it is, why do we care?