As the largest holder of Washington's debt, China should strive to drive a hard bargain with the United States, especially in the context of the latter's insistence on the appreciation of the yuan.

China's status as a major international creditor nation has grown faster than its ascendance as an economic power.

China's US treasury debt holdings rose to $895.2 billion by the end of March, in the process becoming Washington's No 1 creditor.

China, however, has faced a dilemma due to this status, which has imposed asymmetrical rights and obligations with regard to Washington.

Since China's huge foreign investment is in the form of reserve assets or government lending, it may be labeled an "official creditor", as opposed to a "private creditor", which is based on a country's foreign direct and private investments.

By the end of last year, China's foreign reserves had touched $2.3992 trillion, or 69.3 percent of the $3.4601 trillion that the country held in foreign financial assets.

As a fledging creditor nation, China has chosen to convert its enormous trade surplus into official foreign reserves, which have partly found its way into the US capital markets due to Beijing's large-scale purchases of US government bonds.

China is expected to get a return ratio of only 3 to 4 percent by investing in the national debt of the US.

On the other hand, the US, despite its huge debt and yawning trade deficit, accepts more dollar inflow, and then invests these commodity dollars, chiefly into Asian emerging markets.

As a result, Washington gets a return ratio of 10-15 percent compared to China's much lower investment return ratio.

The bi-directional capital investment, in essence, reflects imbalances in international capital flow, and highlights the basic fact that economic globalization has led to developing countries being looted economically by the world's major financial powers.

Since China cannot use its own currency to issue debt, the country's swollen trade surplus has intensified the risk of a devaluation in its reserve assets.

On the contrary, even its ballooning national debt has failed to restrain Washington from becoming the world's largest debtor nation.

Instead, the US is utilizing its debtor status as an unchecked instrument to maintain and extend its decades-long hegemony in the global financial domain.

The long-standing Dollar Standard has not only helped the US to globally circulate its national debt, but has also helped increase its national wealth through monetization of US government debt or depreciation of the dollar.

Statistics show that 48 percent of international trade is settled in dollars, 61.3 percent of the foreign reserves held by other nations are in dollars, and the dollar is used 83.6 percent of the time in international financial transactions.

Due to its dominance in the international financial market, the Dollar Standard has essentially evolved into the US Debt Standard.

As the distributor of the world's leading currency, the US can hike dollar issuances to boost its ability to pay off its inflated national debt.

The dollar's devaluation has been used as a major means to reduce US government debt. From 2002 to 2006, as much as $3.58 trillion of US national debt evaporated due to Washington's increased dollar issuance or dollar devaluation.