March 13, 2009
China’s premier expressed concern Friday about its 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 economic conditions worsen.
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.
[efoods]”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.”
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.
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.
Washington is counting on China to continue buying Treasuries to fund its massive stimulus package. Last month, visiting Secretary of State Hillary Rodham Clinton sought to reassure Beijing that government debt would remain a reliable investment.
China’s foreign minister, Yang Jiechi, said Wednesday during a visit to Washington that Beijing wants to “strengthen macroeconomic policy dialogue” with the Obama administration.
“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.”
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