The Chinese sell a lot of merchandise in the US and, in the process, accumulate a lot of dollars. They then loan many of those dollars back to the US in exchange for treasury bonds, federal agency bonds, and private-sector debt.

America’s indebtedness to China, as a result, is staggeringly high, although the Bush administration seems unfazed. But there is reason for pause.

The Wall Street Journal reported this week that China’s holdings of foreign currency and securities would soon top $1 trillion, a fivefold increase since 2000. Roughly 70 per cent of that is believed to be dollar-based assets. Of course, $1 trillion does not confer significantly more clout than, say, $990 billion. But the size and growth of China’s holdings mean increasing vulnerability for the US.

The Journal also reported that administration officials are concerned that developing nations, unhappy with conditions on loans from the International Monetary Fund, may decide to borrow directly from China. That would give Beijing more influence over emerging markets and their governments.

To its credit, the Bush administration has repeatedly stressed that the rise of China is not to be feared or begrudged. But excessive borrowing during the Bush years has made the US unnecessarily vulnerable.