U.S. calm China
China’s Premier Wen Jiabao had earlier with clear terms expressed his concern that Chinese investment in Treasuries could not be sure. China holds the world’s largest stock of U.S. government securities.
The unusual diplomatic exchange underscores how sensitive the relationship between the U.S. and China. The Obama-government is to rely on China by buying Treasuries programs to revitalize the economy and for the rescue of the banks financing. With the recently adopted economic package is almost $ 800 billion hard. For 2009, the financing needs of U.S. $ 2500 billion at estimated.
China has to increase its investment in U.S. government bonds have suffered losses – which could even worsen if the fight against the crisis, the inflation rise and the dollar devalues. Therefore in China, according to claims become less in Treasuries to invest. However, there is hardly an alternative. “U.S. government bonds are the safe harbor. This is for everyone is the only option, even for China,” had Luo Ping, Director General of the Chinese Banking Supervision, recently acknowledged.
Because of this interdependence also had comments from Ron Kirk, the new Trade Representative of the United States, surprised. He had on Thursday said that the Government examine whether the Chinese monetary policy to the rules of the WTO expectations. This worries flared again on the relationship between the two countries could deteriorate, and it could lead to increased protectionism come.
Earlier, Finance Minister Timothy Geithner of the government in Beijing in late January accused, they manipulate their currency, then but a conciliatory course. The United States, but also European countries accuse China since a long time and again that the renminbi artificially low to hold to the domestic economy to support. Wen made clear on Friday that China is interference in the monetary policy declines.