The Implications of China’s Direct Access to the US Treasury

Here is more proof that the Scarborough Shoal issue has been a sham

From Reuters

China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury's first-ever direct relationship with a foreign government, according to documents viewed by Reuters.

The relationship means the People's Bank of China buys U.S. debt using a different method than any other central bank in the world.

The other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for U.S. debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions.

China, which holds $1.17 trillion in U.S. Treasuries, still buys some Treasuries through primary dealers, but since June 2011, that route hasn't been necessary.

The documents viewed by Reuters show the U.S. Treasury Department has given the People's Bank of China a direct computer link to its auction system, which the Chinese first used to buy two-year notes in late June 2011.

China can now participate in auctions without placing bids through primary dealers. If it wants to sell, however, it still has to go through the market.

This only reveals how the US is in such dire financial straits to grant China's government a privileged DIRECT access to the US Treasury. This is tantamount to BILATERAL financing which now eludes the crony Wall Street “too big to fail” firms.

Cutting the middle man means Wall Street will earn less and will have less info on China-US financing deals.

On the other hand China is likely to be given special deals which won’t be known by the public.

This also exhibits the dimension of relationship between China and the US, which implies of deepening interdependencies on economic, financial and geopolitical aspects.

Of course the inference from the above statement is that the Scarborough Shoal controversy has been mostly a false flag. What you see isn't really what has been. Politicians and media has taken the public for a ride at the circus.