DOLLAR ASSETS:US VICE-PRESIDENT Joe Biden insisted yesterday that China had "nothing to worry about" concerning the safety of its vast holdings of Treasury debt, while Chinese premier Wen Jiabao gave a strong message of support over the resilience of the troubled US economy.
The mutual messages of reassurance rang through the Chinese central government compound of Zhongnanhai yesterday as Mr Biden continued his visit to China, aimed at soothing rattled nerves.
“The prosperity and stability of the United States are important for the whole world,” Mr Wen said at the meeting in Zhongnanhai.
The US vice-president had conveyed a “very strong determination” to enhance Sino-US relations during the first three days of his visit, Mr Wen said, and he was “fully confident” the US economy would overcome its difficulties and become rich again.
“You have clearly told the Chinese people that the United States is committed to preserving the integrity of its public debt, including its safety, liquidity and inflation-resistance, which will undoubtedly enhance investors’ confidence,” Mr Wen said. His comments echoed those of China’s vice-president and heir apparent, Xi Jinping, the previous day.
China was anxious about the safety of its dollar assets after an unprecedented US credit rating downgrade by Standard Poor’s. It is the biggest holder of US Treasuries in the world – at the end of June Beijing held $1.165 trillion (€814 billion) worth.
While there have been a lot of negative comments in official state media, the premier’s comments are the first by a senior Chinese leader on the debt crisis since the downgrade. For his part, Mr Biden said he welcomed China’s investment in US debt.
“Very sincerely I want to make clear you have nothing to worry about,” Mr Biden said. He earlier told the Chinese “no one has ever made money betting against America”.
The two countries are divided on trade and currency issues. China needs to keep exports to the US buoyant to help growth. The US trade gap with China increased to €18.63 billion in June, the widest since September last year. China’s currency is also an issue – the yuan has strengthened beyond 6.40 per dollar for the first time since 1993.
Despite the upbeat tone, there were tensions. Reporters and photographers were angry when media handlers jostled them out of the room while Mr Biden was still speaking, saying time was up.
The previous evening, a “friendship” basketball game between the Georgetown University Hoyas and the Bayi Military Rockets descended into a brawl.
Mr Biden’s China visit is the first leg of an Asian tour that will also take in Mongolia and Japan.
