Feng

China Gets It Right, But Hurts America

I agree with canb888's comments.

Many people confuse a country's foreign reserve as the government's money. They are different things. China needs to pay $ or euro out (take in chinese yuan) from its foreign reserve when foreign investor wants to withdraw their investment, or domestic companies needs $ or euro to buy foreign goods.

Yes china's foreign reserve is heavily invested in US treasury. But China's fiscal stimulus package is not using the foreign reserve. there might be trickling down effect in the sense more domestic companies need $ to buy foreign goods due to the expansion, hence less reserve. But there is no direct relation on fiscal expansion and foreign reserve investment.