U.S. Debt is Losing Its Appeal in China

China has bought more than $1 trillion in American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a shift that could pose some challenges to the U.S. government in the near future but eventually may even produce salutary effects on the world economy, the International Herald Tribune reported. The declining Chinese appetite for U.S. debt, apparent in a series of hints from Chinese policy makers over the past two weeks, comes at an inopportune time. Normally, China would be the most avid taker of the debt required to pay for the "trillion-dollar deficits” that U.S. president-elect Barack Obama warned of Tuesday. But now, Beijing is seeking to pay for its own $600 billion economic stimulus--just as tax revenue falls sharply as the Chinese economy slows. Chinese bankers say they are being instructed to lend more to local governments to allow them to build new roads and other projects as part of the stimulus program. Read more. (Subscription required.)