We buy a lot of things from China and relatively little do we send to them. Maybe they like our smartphone designs, computers, etc, but it is clear they can design as well as build. So if I understand correctly, they buy large amounts of U.S. bonds in order to suppress their own currency and keep exports up. But why do they want to export when they don't import? I've read that China could purchase western companies, but that that might be blocked as a security issue.
The U.S. doesn't consider China to be an ally, at least not publicly. Actually, I don't care what their motivations are, I just want to ask, if I a missing something about the economic arrangement of the deal, - what it is that China buys with its proceeds from massive exports?
I found this, for example (http://www.forbes.com/sites/ianshepherdson/2013/10/23/four-big-reasons-why-china-will-keep-buying-treasuries/),
China lends to the United States by buying Treasuries because it has few other options, not as some kind of favor
China’s reserves have now reached the equivalent of $3.7 trillion, well over half of which is in the form of dollars, and they have to be held somewhere, in some form. The People’s Bank could maintain a gigantic pile of dollar bills, with smaller heaps of euros and other currencies, but they would earn no interest.
This brings us to the second key point, which is that the idea China could sell a substantial part of its dollar holdings for euros makes little sense. This action would represent foreign exchange intervention on a massive scale, and the result would be huge drop in the value of the dollar. The renminbi value of the PBOC’s dollar assets would therefore plunge, imposing a gigantic capital loss. The PBOC is not in the business of throwing money away.
However, it makes very little sense without some large assumptions and so misses my main question completely. They explain why they keep doing it, but not why they did it. It does not explain for what they are accumulating dollars and euros in the first place instead of using those currencies to purchase resources and import them on a massive scale.
It seems to be bases on the conclusion that a) the Chinese want to accumulate banknotes and be as "rich" as possible on paper just like a Wall Street company and b) it did not occur to them that foreign currencies would possibly fail over time, leaving their capital at 0. and c) that they planned at some time to reverse their trend.
Basically, it can only represent a huge charitable contribution of the Chinese government for the sake of employing its workers, keeping its own consumers poor, and gaining a weapon that would allow them to ruin international currency markets if they should want to.