Timing is everything. Three days after Standard & Poor's downgraded U.S. debt, and two days after China's official Xinhua newswire published a scathing critique of the American economy, People's Daily ran a column on its English-language website today with the headline "China must punish US for Taiwan arm sales with 'financial weapon.'"
China, as we all know, is the largest foreign holder of U.S. Treasuries -- to the tune of $1.1 trillion-plus. Ongoing discussions of a U.S. sale of F-16s to Taiwan, which Beijing considers to be part of its sovereign territory, is a hot-button topic in Beijing. China broke off military exchanges with the United States last year after Washington announced the sale of $6 billion-plus in arms to Taiwan.
The argument presented by Ding Gang, an editor at the state-run People's Daily newspaper, did not wander.
His first line --"Now is the time for China to use its 'financial weapon' to teach the United States a lesson if it moves forward with a plan to (sell) arms to Taiwan."
A bit later: "The essence of the problem is that some U.S. Congress members hold a contemptuous attitude toward the core interests of China, which shows that they will never respect China. China-U.S. relations will always be constrained by these people and will continue along a roller coaster pattern if China does not beat them until they feel the pain."
Then this: "China should consider how to build a direct link between the U.S. Treasury bond purchase and U.S. domestic politics while adopting measures to gradually adjust the structure of China's foreign exchange reserves. For example, China can directly link the amount of U.S. treasury holdings with U.S. arms sales to Taiwan and require international credit rating agencies to demote U.S. treasuries to force the United States to raise interest rates."
And: "China can also launch limited trade sanctions to the states of those U.S. Congress members who vigorously advocated arms sales to Taiwan to affect their employment."
To be sure, Ding also acknowledges that to target U.S. Treasuries by selling off Beijing's holdings, or by slowing future purchases, would inflict pain on China itself, which stands to lose a considerable amount of money if the value of its U.S. holdings dipped. That central fact -- I've heard it referred to as a sort of economic mutually assured destruction -- has convinced most observers that China wouldn't engage in any sudden moves along those lines.
Ding's saber rattling doesn't change that reality. But his timing is interesting.
UPDATE: The Chinese language version of the column ran in Global Times, a tabloid published under People's Daily, on August 4. The timing of its publication in English today remains very interesting.