BEIJING — Despite apparent public sentiment in China to the contrary, U.S. Treasury Secretary Timothy Geithner said here Tuesday that Chinese government officials are confident of the stability of their large investment in U.S. dollars.
Geithner, wrapping up his first official visit to China to meet with the country’s top leaders, told state-run television that he believes Chinese officials are optimistic about their American investments. China has invested an estimated two-thirds of its foreign currency reserves in dollars and has not moved the investment, despite the U.S. and global economic downturn.
“I’ve actually found a lot of confidence here in China, justifiable confidence, in the strength and resilience and dynamism of the American economy, and I think a very sophisticated understanding of the steps we’re taking and why they’re so important, not just to the United States, but to China and the rest of the world,” Geithner told China Central Television.
He said the U.S. is eyeing long-term reforms, not just short-term measures to address the current crisis.
“We are very committed to make sure that, when recovery is established, we go back to living within our means, that we bring our fiscal deficits down to a sustainable level, that we unwind and reverse these exceptional measures that we’ve taken in the financial sector,” he said.
Chinese officials did not speak to their confidence about the government’s investment in U.S. currency. But the Global Times newspaper in Beijing reported that an online survey showed 87 percent of respondents felt China’s heavy investment in dollars was unsafe. The conservative newspaper urged Geithner to take the concerns of the Chinese public to heart.
The general public seems to agree. “It’s not safe to invest all of that money in the United States now because they’re in a financial crisis,” said Zhu Zhiwei, a Beijing retiree. “Some people are saying we need to invest that money domestically.”
Geithner’s visit focused mainly on assuring China that its investment is safe and that the U.S. is getting a handle on the financial crisis. He told President Hu Jintao in a meeting that initial joint efforts are working.
“We have already demonstrated the capacity of our two countries to work together on the global stage to lay the foundation for economic recovery,” said Geithner, according to a press pool report.
Geithner also urged China to move forward with currency reform, arguing that appreciation of the yuan would benefit the country’s plans for domestic consumption.
Analysts said Geithner’s visit was a success because it laid the groundwork for improvements in U.S.-China relations without creating any new controversies or sticking points. On Tuesday, the Obama administration said the first round of the U.S.-China Strategic & Economic Dialogue under its watch will be held in Washington in late July.
“Both America and China know that a good relationship between these two countries will benefit the entire world,” said Song Hong, international finance expert with the Chinese Academy of Social Sciences. “Both countries have a major responsibility to the rest of world and we need to work on these problems together.”
In Washington on Tuesday, U.S. Trade Representative Ron Kirk said the U.S. would balance “direct diplomacy and a strong enforcement” of U.S. rights in its approach to trade with China. Talking to the U.S.-China Business Council, Kirk said his office’s approach to disputes with China will be an important element of the trading relationship between the two countries, as well as a key indicator of the administration’s commitment to enforcing existing trade rules.
Kirk indicated the administration is prepared to go to the World Trade Organization to resolve trade disputes when necessary. The Obama administration has consistently said it will focus on the enforcement of existing trade agreements and rules, a claim that they have not yet backed up by filing any specific trade remedy actions. Kirk pointed to the seven WTO cases the U.S. filed against China prior to President Obama taking office as an indication the U.S. does not hesitate to use dispute settlement to enforce trade rules when negotiations fail.
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