Tuesday, July 28, 2009
WASHINGTON (AP) — President Barack Obama put forward his top economic officials Monday to try to reassure China that the U.S. will not let huge budget deficits or runaway inflation jeopardize the value of Chinese investments here.
Among the officials meeting with Chinese representatives Monday, the first day of two-day talks, were Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, National Economic Council Director Lawrence Summers and Peter Orszag, Obama’s budget director.
U.S. officials told reporters that the U.S. side stressed to the Chinese that the United States has a plan to bring the deficit down once the economic crisis has been resolved. Officials said Bernanke discussed the Fed’s exit strategy from the current period of extraordinary monetary easing.
On the Chinese side, Assistant Finance Minister Zhu Guangyao told reporters that Beijing and Washington had “profound exchanges” on the issue of the U.S. economy.
The Chinese, who have the largest foreign holdings of U.S. Treasury debt at $801.5 billion, have been expressing worries that soaring deficits could spark inflation or a sudden drop in the value of the dollar, thus jeopardizing their investments.
The discussions on America’s deficits and China’s role in financing them highlighted the growing economic importance of China, now the world’s third largest economy.
In his remarks, Obama declared a new era of “cooperation, not confrontation” between the two nations as both sides sought to underscore the importance of the revamped Strategic and Economic Dialogue meetings.
The initial talks focused on economic tensions, Obama expanded the agenda to include foreign policy issues such as America’s drive to get China’s support for more international pressure to curb North Korea’s nuclear ambitions.
Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy Geithner were leading the U.S. team.