China’s growing concerns over its assets in the US

The biggest surprise today was not the extra £50bn of Mervyn’s magic money to be created for the purposes of fertilising the embryonic green shoots spotted by stock market traders.

Forget Barclays’ remarkably strong results, and Lloyds’ further revelation of the devastation wrought upon its balance sheet by the purchase of HBoS.

The news of the day is actually in the US, where an auction of long-term government debt was very weakly received, spooking US stock markets. In and of itself it would not have been much of a problem. But yesterday, America’s biggest foreign lender, the Chinese, started to express concerns about lending to the US.

Premier Wen Jiabao said: “We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets. To speak truthfully, I do indeed have some worries.”

Today the Chinese government expressed concern about economic policies in the western world. The People’s Bank of China has said in its quarterly monetary policy report that money creation policies risk becoming backdoor devaluations. Is the “dim sum” beginning to unwind?