Officially, the response from China's government to S&P's downgrading of the U.S. late Friday was summed up by the state-run Xinhua news service: "China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets."

This is a logical response from our largest creditor. The only problem -- it lacks teeth. China's enormous holdings of U.S. debt help keep its currency artificially low. That, in turn, keeps China's exports really cheap. And that keeps Chinese people employed. This is the formula China's economy has been based on for years (for more background, see my story about this from Marketplace last week).

China's trapped. Unless it wants to rapidly appreciate the RMB and set in place even more rapid inflation (a death wish for China's Communist party), it will not sell off U.S. Treasury bonds. In fact, all indications are that it will keep buying them at a steady rate, because there is no currency with more liquidity and flexibility than the U.S. dollar .The Euro comes close, but China's not going to dump U.S. Treasury Bonds for Euros when the economies of Greece, Portugal, Spain, and Italy are so terrible.

So the question isn't "Will the Chinese now sell off US treasuries?" Instead, it's "Is the U.S. a responsible steward of the global economy?" This is what our largest debt holder will continue to ask itself and the rest of the world. The downgrading is another argument the Chinese have in favor of the proposition that you just can't trust the United States of America with your money.

Heck, if you look at the numbers, you might deduce that you can't even trust the U.S. with its own money. The United States has debt approaching 100 percent of its GDP. China's official government debt is less than 20 percent of its GDP; almost none of it owed to foreigners.

The other more disturbing dilemma is what many Chinese have deduced about the U.S. political system after watching the three-ring debt circus in recent weeks: If this is how democracy works, why would we want that?

China spends a lot of time being lectured about how it doesn't understand the global financial system. Now China's government will relish lecturing the U.S. about the same thing.