China tells US to manage flood of dollars with care
Washington: A top Chinese official said on Tuesday the United States should be careful about flooding global markets with dollars while the world struggles to restore economic stability and get growth back on track.
Sitting beside US Treasury Secretary Timothy Geithner, Chinese Vice Premier Wang Qishan made clear at the start of the concluding day of the "Strategic and Economic Dialogue" that China has concerns about its US investments.
"As a major reserve currency-issuing country in the world, the United States should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole," Wang said.
China is the United States` biggest creditor, holding $802 billion of US Treasury securities on May 31, and Washington needs Beijing to keep buying its debt to finance a budget deficit estimated to hit $1.8 trillion this year.
The talks are about more than just economics, with US Secretary of State Hillary Clinton co-chairing the US side and seeking Beijing`s cooperation on a wide range of sensitive foreign policy and diplomatic issues from North Korea and climate change to infectious diseases and energy markets.
North Korea a Worry
Clinton separately hosted senior Chinese officials at the State Department on Tuesday.
"We were very pleased by our discussions yesterday which were thorough, comprehensive, very open and candid and extremely useful," Clinton said at the start of the meeting.
In particular, Washington wants greater support from veto-wielding UN Security Council member China on controlling both North Korea and Iran`s nuclear programs.
Both sides were wielding a carrot-and-stick approach in their public comments, with Geithner saying he would back a bigger role for China in governing the International Monetary Fund and World Bank but still committed to persuading China to back off its reliance on exporting to US markets.
Wang responded that China, now the world`s No. 3 economy with huge reserves of foreign currency, is ready to spur more domestic demand but he specified that he wanted the United States to allow more exports of high-technology goods to China.
"While ensuring economic growth, the Chinese government will focus on boosting domestic demand, and in particular consumer demand, focus on deepening reform and opening up advanced economic restructuring and improving people`s livelihood," Wang pledged.
The stakes are high for both countries in managing economic and diplomatic relations smoothly, as President Barack Obama noted on Monday at the start of the once-a-year sessions.
"The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world," he said. "That reality must underpin our partnership."
Beijing needs access to America`s consumer markets, while Washington is dependent upon China continuing to help finance the shortfall between the government`s spending and its income and both need to boost job-creating economic growth.
Geithner, just six months into his job as U.S. treasury chief, already has visited Beijing to try to reassure it that its dollar-denominated U.S. investments will keep their value and that U.S. deficit will be brought down.
The veteran Wang said on Tuesday that Beijing will help to ensure a recovery from the past two years of financial crisis, which he said seemed to be largely over, but pointed to concessions that China wants.
"We will work to increase our imports from the United States," Wand said, adding: "We hope the U.S. will relax its controls and restrictions on exports to China of its high-tech technologies."
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