A new Treasury Department report reveals that China now holds a record $1.17 trillion of US debt, up significantly from previous estimates.

Over a trillion dollars in debt owed to the Chinese... that's scary news for the US, right? I suppose. But it's gotta be a little unsettling for China too, for with its economic growth predicated on exports to the US, and its US Treasury bond holdings now equaling about a quarter of its GDP, it's not entirely clear who holds leverage over whom?

This news once again reveals the extent of economic interdependency between the US and China. China’s purchase of US Treasury bonds, along with its growing domestic inflation, has led to speculation that the yuan will definitely appreciate in the near future.

The Chinese are letting the yuan appreciate. That's exactly what the US needs in order to boost our own exports. Huh. I guess from the Chinese perspective, you could say that the US has become too big to fail.