NOTE: The only way I could deal with recent events was through the medium of fiction. Here is the Table of Contents. Enjoy.

Clark Randt was pleased to have gotten the audience, yet concerned.

Jin Renqing was a difficult man to reach, even for him. Fact is, he hardly saw anyone in the diplomatic corps. They were roughly the same age (Jin was 60), Jin was a bureaucrat rather than a lawyer, but they were men of similar temperament, both (in the end) Mandarins, quiet servants to power.

His meeting wasn't in some grand hall of the Forbidden City, but in an unobtrusive office, in a new office building, looking over the haze that is now Beijing's constant deadly companion.

Randt chose not to begin with pleasantries, once he sat down to tea, but to get right to the point. "Why has your government noticeably slowed its purchase of U.S. bonds?

To his surprise, Jin was dismissive. "This is an internal matter," he said through his translator.

"It's not a secret," Randt replied as gently as he knew how. "The news has spread like wildfire through the financial markets. Bond prices are down. The Fed may have to raise interest rates. And our recovery is tenuous."

Jin hardly looked up. "This is not our concern," he said. "This is just business. My job is to maximize return, or at least avoid taking a bath. We need a soft landing."

Randt quietly sipped his tea, hoping Jin would go on.

"We are currently buying roughly 35% of your national debt each year." Jin finally spoke, and Randt was inwardly pleased. "We have all the reports you do, and we find increased risk of default. We don't wish to have that risk."

"Default?" asked Randt, incredulously. "American paper is as good as gold."

Jin shook his head. "Not anymore. Your government must finance $400 billion per year, on top of your other burdens, and this is unsustainable. We have taken dollars to finance your trade deficit, and to maintain stability. But balances must be adjusted. It's business."

Randt felt sweat on his forehead. He took out a handkerchief to wipe it away. "Your government needs to understand. We must continue to prosecute the War on Terror. It is our chief international commitment. We must continue to run deficits to supply our troops."

"That is your internal matter," Jin said quietly.

"We can't take back the tax cuts. And tax increases at this point on those with lower incomes would be political suicide."

Jin shrugged. "China is moving in new directions, Ambassador Randt. We see enough foreign reserve to allow the RenMinBi, what you call the Yuan, to float against other international currencies, just as your dollar floats in value. I tell you this in confidence, sir. We will announce that change shortly. Our calculations show that, even with many wanting to diversity into dollars, we will more than hold our own against that currency. By spring the Yuan's value against the dollar will begin to rise.

"My goal is to make the Yuan a new reserve currency, one held by major banks, one in which trade can be financed. With our current dollar holdings we are on the edge of reaching that goal. We only need to buy Euros to prevent a rush in that direction. So we reduce our intake of dollars, we seek Euro loans.

"This is basic economics. Your currency is on an unsustainable course. You cannot keep borrowing. Your economy cannot sustain itself."

"But we can't reverse course."

"Do what you can." Jin waited for Randt to respond, then conceded to continue. "I tell you this in strict confidence, Clark. We're old friends. We play with power like children in a sandbox, knowing it is our parents' sand. You can either withdraw from Iraq, or perhaps you would quietly stop your military aid to our province island."

"Abandon Taiwan?"

"We don't speak the province's name in this room. Right now we could take it. There would be bloodshed. It would be disruptive. We might go into recession for a time. But we could always sell dollars to deal with that, especially if your government chooses to resist. The blood need not be red. Green will do"

"That would destroy our currency!" said Randt with horror, losing his diplomatic mask for a moment.

"That would not be the concern of what might then be a protagonist in war," Jin said quietly, an eyebrow arched.

"China is showing her independence, Mr. Randt. Your people have chosen an unsustainable course. You have lost the mandate of heaven. You may choose Iraq or Taiwan, but within a year the choice will not be either-or, but both." Jin looked back to the papers on his desk, and got up to dismiss Randt as his translator slapped the notebook on her knees shut.

Lose Taiwan? Randt thought frantically as he was escorted out. The home of so much of America's electronics industry? Its largest chipmaker and assembly point?

He wouldn't even mention Iraq in his communique. He knew how Washington would respond to that. But if he didn't, he thought again, war with China might become inevitable. And the destruction of the dollar as a reserve currency. As hard as it was to buy oil in dollars, imagine having to buy it in Euros or Yuan.

What were the options? A devaluation was certain, by the Fed or the markets. Reneging on interest in Chinese loans would also be an act of war.

It was like those Chinese finger puzzles. The more you struggled against it the worse it got. Randt felt his legs growing weak....