U.S. Debt Worries China

America's Largest Foreign Creditor Concerned Its Massive Holdings Will Plummet In Recession

(AP)  China's premier expressed concern Friday about its massive holdings of Treasuries and other U.S. debt, appealing to Washington to safeguard their value, and said Beijing is ready to expand its stimulus if the economy worsens.

Premier Wen Jiabao noted that Beijing is the biggest foreign creditor to the United States and called on Washington to see that its response to the global slowdown does not damage the value of Chinese holdings.

"We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference following the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."

Wen's comments foreshadowed possible appeals to President Barack Obama, who will meet with Chinese President Hu Jintao at a London summit of leaders of the G-20 group of major economies on April 2 to discuss the global financial crisis.

Analysts estimate that nearly half of China's $2 trillion in currency reserves are in U.S. Treasuries and notes issued by other government-affiliated agencies.

Washington is counting on China to continue buying Treasuries to fund its $787 billion stimulus package. Last month, visiting Secretary of State Hillary Rodham Clinton sought to reassure Beijing that government debt would remain a reliable investment.

"They are worried about forever-rising deficits, which may devalue Treasuries by pushing interest rates higher," said JP Morgan economist Frank Gong. "Inside China there has been a lot of debate about whether they should continue to buy Treasuries."

The comments come as finance ministers and central bankers of the G-20 gather in London this weekend to discuss the crisis and possible remedies.

U.S. Treasury Secretary Timothy Geithner is pressing for a new coordinated stimulus but European governments are reluctant to take on more debt before they see how current plans are working. The Europeans want to emphasize the need for greater regulation of markets, including a crackdown on tax havens and increased control over hedge funds.

In Beijing, Wen expressed confidence China can emerge from its slump "at an early date," and said the government is ready to expand its 4 trillion yuan ($586 billion) stimulus to boost growth in the world's third-largest economy.

Communist leaders worry about rising job losses and possible unrest amid a trade slump that saw Chinese exports fall 25.7 percent in February from a year earlier. They have promised to spend heavily to create jobs and boost exports.

"We already have our plans ready to tackle even more difficult times, and to do that we have reserved adequate ammunition," Wen said. "That means that at any time we can introduce new stimulus policies."

In nearby Japan, Prime Minister Taro Aso called Friday for a fresh stimulus to help lift the world's second-largest economy out of "an unprecedented economic crisis." The comments helped spark a rally in Japan's stock market, where the Nikkei 225 stock index surged 5.2 percent.

China's Wen and other officials point to rising bank lending, power demand and other signs the stimulus is taking effect. But growth in retail sales is weakening, suggesting it has yet to spur private sector spending and investment, which analysts say will be key to its success.

Wen said Beijing can meet its 2009 growth target of 8 percent, despite skepticism by private sector economists, who expect as little as 5 percent. That would be the strongest of any major country but could lead to more waves of job cuts.

"I really believe we will be able to walk out of the shadow of the financial crisis at an early date," he said. "After this trial, I believe the Chinese economy will show greater vitality."

The premier promised to focus on job creation and give more help to smaller companies, which he said generate 90 percent of Chinese new employment.

"We will pay all attention possible to this issue and we will never overlook this issue," he said.

Wen said Beijing wants the London summit to focus on the plight of poor countries.

"We must see to it that we show concern for developing countries, and help developing countries - the least-developed ones in particular - become an important topic on the agenda," he said.

[esbeesue]

Just an example of how our tax dollars are being misused on a global level:

Coporate ag wants to be able to sell their meat/meat products of a global level. They use over $150 million of our tax dollars to fund a program through the USDA that will require all others owning animals (excludes corporate ag) to register their premises (negates property rights) microchip all critters at big cost, report all their movements, births, deaths to a database, then risk losing them to depopulation if disease is suspected in a 6 mile radius!

Currently, only sex offenders/child molesters are tagged tracked and register their premises. Animal owners will be tracked closer than illegals and fined heavier than drug dealers....

all this just so corporate ag, who does not have to follow these rules/regs says to Japan or other countries "see how safe the meat is."

How does me telling the govt where and when I ride my horse have to do with Japan eating safe American beef?

NAIS (The National Animal Identification System), is a so-called disease tracking food safety program the USDA is forcing on those who own even one chicken, horse, goat, pig, or other farm animal. Pet pot belly pigs and parakeets in suburbia, llamas and farmed fish are included. Many are being signed up without their knowledge or permission and over 90% are against this program. see no nais dot org for more info on the program that will affect everyone who eats.

[dls1962]

I am a Republican who voted for Bush, but let's face it; the current crisis was inherited by this administration. I can't believe the political commentators who claim that all of this is the fault of 2 or 3 Democrats, including Obama. The white-collar establishment was allowed to operate unchecked for too long. There is enough blame to go around in both parties, so let's quit prophesying doom and become part of the solution.

Republicans balk at the spending necessary to get us out of this hole, without offering any viable alternatives. I'm embarrassed by the rhetoric of the GOP who would rather see Obama fail than the country succeed. The kicker is that if a Republican president was doing exactly what Obama is doing now, they would support it. The only difference is that the $$ would be going to the richest people in the country instead. Kudos to Obama for making hard decisions.

The Republican party lost his base of supporters because of the gross spending that he and his party engaged in beyond the War. Bush won the first time because he was running against a big government liberal Al Gore. Obama is doing more of what Bush and the Republicans did the last eight years by increasing Government spending even more than Bush and the Republicans at a time when wages are going down and people are being layed off.

The patern here is that the majority of americans want a smaller more efficient government that is not looming over them with the certainty of massive tax increases.

Bill Clinton was famous for saying "the era of big government is over" and this made the majority of americans very happy when we were no longer running deficeits and had begun to pay down the debt. He and a republican congress that stuck to their consertive principles accomplished what Americans wanted and he was very popular til the end.

The lesson from history is that if Obama and his socialist buddies do not reverse coarse and stop expanding government he will surely be a one term president! You can count on it!

[genro08]

why bother too much greed
too many lazy people, why dont we grow more food and harvest more jobs from farming as we need it to survive. replant as much land as possible with trees and food trees, we can all do or part in helping the plant. thanks for taking my last post down a hours after i posted it, i think it was straight to the point and true not attacking anyone in true facts,
i write long and roughly but this is because i choose to do, but we all need to do our bit , just the governments need to put something in place. .

[skyk-2009]

If we don't make good on the ROI of their money, they will come and take it by force. It's survival of the fittest and why does Obama think the Chinese will front us even more money for his collosal spending anyway?
Posted by joule18 at 7:56 PM : Mar 13, 2009

How in this world people like you can try to blame the Meltdown we face and the Debt we must deal with on Obama and the Democrats is beyond me. When we allowed the Incompetent Circus of Clowns a few call the Republican Party to con us into allowing them to run the Nation in 2000, when we turned a Balanced Budget and Surplus over to them only to end up with the MESS that was handed our New President? THAT was our mistake, not electing this bright young leader who has a plan to get us OUT of the mess and away from Trickle Down Economics! Maybe you THINK we will forget that but I really doubt it!!

[antoniof123]

I don't blame China for being worried about their money....

Look at the MORON we have sitting in the White House spending like a crackhead adolescent with mommie and daddy's credit cards....

Hint clue China!!! CUT HIS CREDIT CARDS OFF!!! That's what you do with an adolescent who can't control their spending habits!
Posted by IamInnocent at 9:39 PM : Mar 13, 2009

You must mean the previous moron who spent 5.5 trillion dollars in debt with no way to pay it back because he kept cutting taxes.

Hey don't worry we swing voters are not dumb and we have a long memory. Remember the war of lies that is still stinging us.

So don't be suprised if this doesn't work.

[garyl615]

Mao Tse Tung said " A capitalist will sell you the rope that you can hang him with." I don't know whether Mao realized how capitalistic his communist country would become. They definitely have the rope.

[joule18]

If we don't make good on the ROI of their money, they will come and take it by force. It's survival of the fittest and why does Obama think the Chinese will front us even more money for his collosal spending anyway?

[chris_n_ABQ]

If they built a bridge across the Bering Strait...it would connect the world globally.


------ Again, the world is already well connected globally.

A solution to a problem that doesnt exist is not a solution.. Its a new problem.

[chris_n_ABQ]

One of the greatest world projects would be to connect every continent in the world with the train railway system. If .......etc etc

newscomme


Interesting idea.. Few problems though.

Look at a globe and try to fathom how much distance you are talking about. Freight trains, very very heavily loaded would have to go very far north andf back south on both ends of the journey.

Trains hold very very little cargo compared to ships.

Electricity is not made from thin air. In fact it is made from burning coal these days, so its made from very dirty air.

Why implement a 19 th century solution to a problem that doesnt exist?
Right now there are more ships than CARGO

We should make more of our own stuff, not get it all from China.

China imports almost n0othing from us but cars. Its true.
Simply put, there are so few goods for us to ship that there is no need for a train.

Think about it for a while: it's a creative idea, but really it's quite rediculous and unneccesary.

Might as well talk about drilling a hole through the center of the earth for easy access to asia LOL