Are we missing a very pointed message from one of our biggest investors, economic partners, and geopolitical rivals?

Recently President Obama received the Dalai Lama into the White House in an attempt to show that he is widely open and receptive to all religions around the world and a friend to oppressed people. We also recently entered into an arms deal with Taiwan that raised the eyebrows of the Chinese. To add to that we have been attempting to lecture the Chinese about their currency policy and there trade practices. At the same time we are sending our deficit through the roof and our economy is still faltering. One has to wonder what the Chinese will do to get our President's attention.

Reading between the lines, recently a front-page story in the state's China Information News said the record $34bn sale of US bonds in December was a "commendable" move. The article was republished by the National Bureau of Statistics, showing that the sentiment is shared in the federal government.

This follows a piece last week in China Daily, the Politburo's voice, citing an official from the Chinese Academy of Sciences praising the move to "slash" holdings of US debt. This was published on the same day that President Obama received the Dalai Lama at the White House, defying protests from Beijing.

China's power is growing so fast that it now feels confident enough to raise the stakes on a string of festering conflicts with the US. It has threatened to impose sanctions on any US firm that takes part in a $6.4bn arms deal for Taiwan agreed by the White House. This is a tougher response that on any previous occasion and raises this could signal that China is willing to engage in a trade war over Boeing, the key supplier.

This sentiment is shared by other experts. "Chinese leaders are deploying their reserves to try and pressure the US to stop haranguing China about its currency and trade policies, and to back off from interference in its domestic issues," said professor Eswar Prasad, ex-head of the IMF's China division.

Stephen Jen from BlueGold Capital said Chine is probably moving out of bonds from many countries as it prepares for a likely 5pc revaluation of its currency in coming weeks. Other assets might prove better protection against an immediate loss on holdings

This calculated use of China's $2.4 trillion reserves to challenge US foreign policy does have drawbacks, we are China's biggest customer and challenging us here will directly affect Chinese exports. Beijing cannot stop accumulating dollars unless it is willing to let the yuan ride, eroding the margins of its export industry. Some reserves can be parked in gold or even copper, but liquid commodity markets are not big enough to absorb the scale of Chinese surpluses. Of course as the Chinese economy grows and becomes the largest economy on the planet, the picture changes dramatically. It is predicted that this will be the case by 2040, so we should be paying attention.

However, our President seems oblivious to the obvious, if you poke the dragon you are liable to get singed. If the Chinese decide that they would like to send us a message this is probably a fast and easy way to do it. Unfortunately for the US economy we don't seem to be listening to the potential pit falls. If we don't clean up our fiscal policy fast we leave ourselves exposed not only to the dragon but to every other country that is holding our paper.