U.S. Assures ‘Concerned’ China It Will Shrink Deficit

[Heidi]

Source: Bloomberg

By Rob Delaney and Rebecca Christie

July 28 (Bloomberg) -- Treasury Secretary Timothy Geithner pledged to rein in the U.S. deficit as China underscored concern about preserving the value of its $801.5 billion of Treasury holdings.

The U.S. will ensure a “sustainable” deficit by 2013, Geithner said at the beginning of the first round of Strategic and Economic Dialogue talks under President Barack Obama in Washington. China is “concerned about the security of our financial assets,” Assistant Finance Minister Zhu Guangyao said.

In a shift from meetings under the Bush administration, officials indicated there were few signs of tension over the value of China’s yuan, which U.S. lawmakers have labeled as artificially cheap and an aid to Chinese exports. That may be because the “best idea is just to keep the yuan-dollar rate stable” given U.S. need for Chinese demand for Treasuries, said Ronald McKinnon, a professor of economics at Stanford University.

<sniip>

The new focus on the deficit and Treasuries reflects the legacy of China’s record trade surpluses and its accumulation of dollars as a result of holding down the yuan. Chinese foreign-exchange reserves surpassed $2 trillion for the first time in the second quarter, and its holdings of Treasuries reached $801.5 billion in May, about 100 percent more than at the start of 2007.

Geithner is co-hosting the SED talks with Secretary of State Hillary Clinton. Vice Premier Wang Qishan and Dai Bingguo, a state councilor, are attending for China.


Read more: http://www.bloomberg.com/apps/news?pid=20601080&sid=aaVGe5smuZAU

[jody]

1. "Shrink Deficit" is a joke. n/t

[barb162]

5. Yeah, "joke" sums it up nicely.

[BeHereNow]

2. Does Obama know these people are crack heads?

The last line made me laugh out loud...
BHN

[ohio2007]

3. The U.S. will ensure a “sustainable” deficit by 2013, Geithner said figuring the Chinese will not

have a clue about what that meant back in 2009. ;)

[tabasco]

4. Nice to know who we work for!

Thanks Bush!

[amandabeech]

6. It's too bad that we can't put a tariff on Chinese goods to make up for the fact that

they (1) refuse to allow their currency to float unhindered, (2) have nothing like he fair labor standards act (wage and hours rules), (3) no workplace safety standards (enforced) like OSHA, and (4) no enforced environmental standards in any way as severe as ours.

Such a tariff would level the playing field between U.S. and Chinese production facilities and generate loads of revenue.

Too bad we can't do such sensible things.