HAVE CHINA AND JAPAN OVER-EATEN?

There is some tension building between China and the U.S. A lot of it has to do with our plans to sell Taiwan a bunch of sophisticated military equipment. Some of it has to do with the Chinese government's disregard for the human rights of its citizens, as displayed in its dispute with Google. Some of it has to do with our concern for China's occupation and suppression of Tibet. Part of the tension is due to China's holding so much U.S. debt, and their worry that the debt will be repaid with inflated dollars. Part of it is due to China's indifference to the intellectual property rights of American companies. Some of the tension is due to all the cyber-attacks that originate in China, government-sponsored or not. Then there's China's reluctance to participate in sanctions against Iran.
Some have been concerned that China might someday, in anger, or out of spite, or just to flex its economic muscles, flood the market with U.S. government paper. I don't think there are any circumstances under which this would happen due to the negative impact it would have on China's balance sheet.
What has happened, though, is that in December, China sold off 34.2 Billion dollars worth. Interestingly, Japan sold off $11.4 Billion.
The next U.S. debt auction will be very interesting.