US Treasury Secretary Tim Geithner Monday reassured China and Chinese people that Beijing's huge holdings of American government debts are safe. He also affirmed his faith in a strong US currency.
A major goal of Geithner's maiden visit to China as US Treasury chief is to allay concerns that Washington's ballooning deficit and loose monetary policy, taken to thwart economic crisis, will fan inflation, undermining both the dollar and its paper bonds.
China is the biggest foreign owner of US Treasury bonds. US data shows that it held $768 billion in Treasury bonds as of March. Analysts believe China's total US dollar-denominated investments, including both government and corporate papers, could be twice as high.
"Chinese assets are very safe," Geithner said in response to a question after a speech at the prestigious Peking University Monday, where he studied Chinese as a student in the middle 1980s.
Geithner renewed pledges that the Obama administration would cut its huge fiscal deficits and promised a "very disciplined"future spending, once a recovery takes hold there. "We have the deepest and most liquid markets for risk-free assets in the world. We're committed to bring our fiscal deficits down over time to a sustainable level.
"We believe in a strong dollar ... and we're going to make sure that we repair and reform the financial system so that we sustain confidence,"he said.
Secretary Geithner also offered strong backing for a bigger Chinese role in international policy-making. "China is already too important to the global economy not to have a full seat at the international table,"he said.
Geithner, who is due to meet President Hu Jintao and Premier Wen Jiabao Tuesday, described the recession as still "powerful and dangerous"in much of the world.
Recent signs of improvement were not enough to change an International Monetary Fund prediction that world output would shrink this year for the first time in 60 years. And credit was likely to be tight for some time, Geithner said.
US Treasury Secretary Timothy Geithner holds up a photo, showing his days as a student in Peking University where he studied Chinese in the 1980s, given to him by his former teacher Bo Min (L) at the university in Beijing June 1, 2009. [Agencies]
But he added: "The global recession seems to be losing force."
Moreover, the US financial system was healing and it now seemed assured that the world would avoid financial collapse and deflation.Agencies – People's Daily Online