The author believes that China should participate in the US bailout, but within limits.

Judging from historical data, the United States adds approximately US$600 billion in national debt each year, about 70% of which is purchased by international investors.

This year, coupled with the current US$700 billion in bailout funds, the issuance scale of US Treasury bonds will reach approximately US$1.3 trillion. At present, some large financial institutions in Europe are also frequently in emergency. Considering the important role of the banking system in the European financial system,

The challenges facing Europe's financial system are likely to be even greater than those in the United States.

Therefore, I believe that without the support of countries with huge foreign exchange reserves such as China and Japan, the U.S. plan to save its financial system will be difficult to succeed.

At the same time, in the context of the current close-knit global economy, a crisis in a huge economy like the United States will inevitably spread to other economies quickly. If the international community does not take timely measures to deal with the crisis, this crisis will have consequences for the entire world.

The damage will be incalculable.

For China, the importance of the U.S. market is self-evident. The current U.S. financial crisis will inevitably lead to a decline in consumer demand. In this sense, it can be said that China’s participation in the U.S. bailout is also saving itself; on the other hand, because China holds a large amount of

of U.S. government bonds and agency bonds (such as Fannie and Freddie bonds), and now it is obviously difficult for the United States to restore liquidity in the financial market on its own. If the U.S. Federal Reserve system injects more liquidity into the financial system through additional currency issuance, it will be very difficult.

This may lead to an increase in inflation, resulting in a depreciation of the U.S. dollar and U.S. dollar assets.

Therefore, from the perspective of safeguarding China's huge holdings of U.S. dollar assets, it seems that China must also participate in the U.S. bailout.

However, the current domestic economic situation in China is already severe. A large number of export-oriented small and medium-sized enterprises have gone bankrupt, and the profit growth of large and medium-sized industrial enterprises has declined sharply. Coupled with the current sharp deterioration of the external environment, China has to invest a large amount of funds to implement restrictions on domestic enterprises.

The rescue plan helps distressed companies achieve production transformation.

Therefore, China should first care about its domestic enterprises to tide over the difficulties.

Secondly, since China’s economy is highly dependent on foreign countries, the current recession in external demand will undoubtedly lead to a sharp decline in foreign trade surplus. Under such circumstances, although China’s foreign exchange reserves are huge, about US$1.2 trillion of them have been invested

In the U.S. market, if we remove about 600 billion U.S. dollars of reserves to prepare for possible temporary imbalances in the balance of payments, the remaining available funds will only be about 200 billion U.S. dollars.

From this perspective, it is impossible for China to provide large-scale financial assistance to the United States.

Even so, if China can join the international community in participating in this rescue operation, it will be beneficial to China's own economic interests, to improving China's international image, and to the global economy.

For example, in order to jointly respond to the impact of the U.S. financial crisis, China, Japan, and South Korea initiated the establishment of the US$80 billion "Asian Mutual Fund" to maintain the stability of Asia's economic and financial situation.

Of course, the premise is that the U.S. government must ensure the safety of investment.

Ronald MacKinnon recently wrote an article saying that to fundamentally solve the current difficulties and challenges, the U.S. government must first restore a strong dollar policy and instead pursue a tight monetary policy to allow outflows of private capital to flow back into the United States.

Because these measures will help alleviate the crisis in the US credit market.

At the same time, the U.S. government should give up its demand for forcing the RMB to appreciate and maintain the stability of the exchange rate between the RMB and the U.S. dollar, so that China's economic growth pattern can be temporarily continued and China's huge U.S. dollar assets will not suffer huge losses.

On this basis, the international community should work out a solution to the problem on a fair and just basis.

From China's perspective, participating in the U.S. bailout does not necessarily mean purchasing U.S. Treasury bonds.

Large Chinese companies may also wish to follow the practices of some Japanese financial institutions and purchase equity or assets of some U.S. financial companies. Of course, this requires a clear investment strategy and cannot just be based on the idea of ??bargain hunting.

In addition, we can also consider using my country's overseas bonds to buy back U.S. equity investments in Chinese companies, so that China can sell the bonds in exchange for the property rights of U.S. companies in China.

Doing so will not only save the United States, but also benefit China's own development.