Beijing: The United States must ease Beijing`s worries about its vast US debt holdings, China`s top newspaper said on Wednesday ahead of a visit by Vice President Joe Biden, warning that mishandling ties would lead to a "roller-coast ride" that would sap global confidence.
Commentaries in the domestic and overseas editions of the People`s Daily, the official newspaper of China`s ruling Communist Party, spelled out Beijing`s chief concerns ahead of Biden`s arrival in Beijing on Wednesday evening local time.
China wants Biden to reinforce U.S. assurances that its holdings of dollar assets and US Treasury debt remain safe, despite Standard & Poor`s recent downgrade of the United States` long-term credit outlook, the paper indicated.
"China, as the biggest foreign creditor of the United States and the largest foreign holder of dollar assets, is naturally more concerned about U.S. policies than others," said a commentary in the overseas edition of the People`s Daily.
"We deeply understand that joint action would help the United States to overcome difficulties, and hope the visit of the Vice President can help bilateral communications and dialogue," said the commentary by Shen Dingli, a professor at Fudan University in Shanghai, who studies Sino-US relations.
Since S&P cut its credit rating for long-term US debt in early August, Chinese state media have accused Washington of reckless fiscal policies that have created uncertainty about Beijing`s big holdings of dollar assets.
Analysts estimate Beijing has put about two-thirds of its $3.2 trillion foreign exchange reserves, the world`s largest, in dollars and is the United States` biggest foreign creditor.
Despite the downgrade from S&P, one of the three big ratings agencies, investors have poured funds into US Treasuries as a safe-haven amid turmoil in global equity markets and questions about the strength of European economic growth.
Staying off the Roller Coaster
China`s rise has also prompted diplomatic tensions with its neighbors and the United States, long used to being the pre-eminent military power in Asia. Reflecting the fact, that domestic edition of the People`s Daily says more than China`s economic interests are at stake in ties between Beijing and Washington.
"A healthy atmosphere of practical cooperation between China and the United States will help enhance confidence in coping with global challenges," said a commentary in the paper.
"But whenever the two countries` relations experience problems, the negative impact is also global," it said.
"How to avoid roller coaster-like ups and downs is a real issue confronting China and the United States," it said.
Biden`s visit to China is part of a trip that will then take him to Mongolia and Japan. Washington officials have said the Vice President`s priority in Beijing is to forge ties with Chinese Vice President Xi Jinping, who is virtually certain to succeed Hu Jintao as president from early 2013.
In the first half of 2010, Sino-US relations were unsteadied by disputes over Internet censorship, Tibet and US arms sales to Taiwan, the self-ruled island that Beijing deems an illegitimate breakaway.
More recently, the two sides quarreled over how to address rival territorial claims in the South China Sea, where Beijing`s claims overlap with several southeast Asian countries`, as well as Taiwan`s.
Tensions in the sea flared in June, setting China against Vietnam and the Philippines, and raising the risk of confrontation with the United States over the disputes.
The Obama administration has stressed its support for a collective regional solution, while Beijing favors addressing each dispute separately.
Damage from mishandling those issues would ripple across the globe, said the People`s Daily.
"The series of sensitive factors in Sino-American relations must not be ignored," said the domestic edition of the People`s Daily, noting Beijing`s anger over arms sales to Taiwan.
"If the United States ever clashes with China over its core interests, Sino-U.S. relations will undoubtedly experience fresh turbulence," said the newspaper.
"China and the United States indeed both have a long list of issues, old and new," it said.
"With the new challenges facing global economic recovery, both countries have a duty to boost confidence worldwide."
Separately, the People`s Daily said it had conducted an exclusive interview with Biden in Washington and paraphrased comments from Biden were published in Chinese.
In those comments, Biden did not mention specific debt or geopolitical issues but said he welcomed Chinese businesses to invest in the United States.