Biden, Unsolicited, To Chinese On Viability Of U.S. Treasuries: “You Have Nothing To Worry About”
Aug 19, 2011 2 Comments ›› Pat Dollard
Vice President Biden offered reassurances Friday to China that the U.S. would repay its debts.
Biden assured Chinese Premier Wen Jiabao that the U.S. appreciates China’s conclusion that the U.S. “is such a safe haven because we appreciate your investment in U.S. treasuries.
“And very sincerely, I want to make clear that you have nothing to worry about in terms of their viability,” Biden said, according to pool report.
The debate in the U.S. over raising the debt ceiling was unnerving for China in that Washington came close to missing its debt line for raising its borrowing limit. This risked a U.S. default on its debt payments, and China is the largest holder of U.S. debt.
A big part of Biden’s trip this week is to reassure China that the U.S. is getting its fiscal house in order and will always be able to pay its debt. Biden also met with Chinese President Hu Jintao and Vice President Xi on Friday.
Xi said Biden briefed him on U.S. efforts to spur its economy and tackle its deficit, and expressed China’s confidence in the resilience of the U.S. economy.
Wen said it was important that Biden send “a very clear message to the Chinese public that the United States will keep its word or . . . obligations with regard to its government debt.”
“It will preserve the safety, liquidity and value of U.S. treasuries,” Wen said. He added that it would also boost investor confidence in the U.S. economy.
Markets dropped Thursday on fears of the global economy, but this has had the effect of pushing investors into gold and U.S. treasuries, which are still seen as a safe investment.
When Congress returns to Washington in September, attention will turn to a debt “supercommittee” created by the debt ceiling deal. That committee is charged with finding $1.5 trillion in deficit cuts, which if agreed to could reassure China and other holders of U.S. debt.
President Obama has also promised to unveil a new proposal to reduce the deficit and spur economic growth in September.
Wen also offered words of confidence for the U.S. economy.
“In spite of the difficulties facing the U.S. economy at present, I have full confidence that the United States will overcome these difficulties and get its economy back on track of healthy growth,” he said. “The prosperity and stability of the United States is in the interest of the whole world.
