I wandered 2 weeks ago just how long China could continue buying commodities instead of U.S. treasuries.  Seems like the answer was, 2 weeks!

A big reason why the $20 billion Chinalco purchase into Rio Tinto fell through was that commodities have been on a tear (itself due, in large part, to Chinese demand as an alternative to treasuries).

Time says:

The deal’s outcome also leaves another basic question unanswered: What is China going to do with all of it’s money, if the developed world sends signals that it doesn’t really want it — at least in forms other than investments in US Treasury debt? One of the things a country with more cash than it can possibly invest at home — a description which China fits in spades — does is recycle its surpluses is through foreign direct investment. And China, in fact, has done scores of resource deals in the developing world — of late with Russia, Kazakhstan and Brazil in the old and gas sector, for example. But twice now in the developed world, big Chinese investments have been spurned. First CNOOC, now Chinalco.

I know the answer: Treasuries!