An August 9, 2011, Wall Street Journal editorial notes something hypocritical about the Chinese government and government controlled media criticizing the United States for our government's "debt addiction."

The People's Bank of China (PBoC) accumulated its forex reserves by borrowing yuan from the Chinese people. The U.S. dollar assets and yuan liabilities are roughly balanced on the central bank's balance sheet. If the U.S. government is addicted to debt, so is China's.

The purpose of that precarious balance sheet is to subsidize exports by keeping the yuan's value low and deferring inflation. An economy like China's that is enjoying rapid productivity growth would normally see rising real wages and hence benign inflation that would increase the cost of its exports. Because that process has been stopped, China's exporters remain competitive across a range of labor-intensive products such as shoes and garments in which the country no longer has a true comparative advantage....

In the short term Chinese threats to stop buying U.S. debt are empty, since there are no other asset markets deep and liquid enough to absorb the purchases needed to keep the yuan stable. Were China to buy euros or yen in sufficiently large quantities, it would soon run into a protectionist backlash in Europe and Japan as those nations ran trade deficits. The U.S. willingness to run a persistent trade deficit is key to the dollar's status as a reserve currency.