US will never default on debt: Biden

Last Updated: Sunday, August 21, 2011 - 17:23

Beijing: The United States, world`s biggest economy, has never defaulted on its debt and never
will, Vice President Joe Biden assured an anxious China on Sunday, as he pressed for greater transparency in the booming Communist nation`s trade and investment conditions.

"Some Chinese are concerned about investment in the United States", Biden told students at Sichuan University in the southwestern city of Chengdu the last stop on his five-day visit.

"But the US owns 87 per cent of our financial assets and 69 per cent of treasury bonds. China owns only 1 per cent of financial assets and 8 per cent of our treasury bonds," he said during a visit aimed at boosting sagging Chinese confidence in America`s finances.

"So it`s in our interest not just to protect Chinese investors. We have an overarching interest in protecting the investment," Biden said, emphasising that "the United States has never defaulted and never will."

China is the largest foreign holder of US debt with USD 1.2 trillion in US Treasury holdings. Following a debt crisis and a downgrade by Standard & Poor`s, some in China have questioned the ability of American lawmakers to create policies to rein in the ballooning debt.

Chinese officials have criticised the recent political row in the US over raising its borrowing ceiling, and
expressed concern over the recent downgrade of the country`s credit rating.

"You`re safe," Biden told students in answer to a question about Washington`s ability to repay its debt.

"If the world thought, my God, they`ve been downgraded and they`re not going to make good on their debt, it would not have been viewed as the safest haven in the (entire) world to invest. We are still the single-best bet in the world in terms of where to invest," he said.

Since Americans own 85 per cent of the national debt, any politician that defaults would have to disappoint them, and "no politician wants to do that," he added.

He told the students that America has a GDP of almost 15 trillion dollars and about two-and-a-half times as large as China`s, the second largest economy.

Biden said, American companies continue to face major investment barriers in China. He said American businesses in China face "restrictions that no other major economy imposes on us or so broadly."

American and Chinese prosperity is key to reviving the global economy and no major problems can be resolved without the assistance from both key economies, Biden said.

"We`re the two biggest engines in the world to be able to do that," he said.

The economy has been the focus of Biden`s trip, with both his Chinese counterpart Xi Jinping and Chinese Premier Wen Jiabao seeking reassurance that the US debts are secure.

Biden has responded he had unequivocal confidence in the recovery and growth of the American economy.

"No one has ever made money betting against America," he said in on Friday. Biden arrived in China on Wednesday at the invitation of Xi as part of planned reciprocal visits by the two nations` vice presidents.

Political analysts, quoted by CNN say Biden`s trip is an opportunity for American officials to know Xi, who is considered a likely successor to President Hu Jintao next year.

PTI



First Published: Sunday, August 21, 2011 - 17:23

More from zeenews

 
comments powered by Disqus