Geithner's China trip to focus on trade

(Agencies/chinadaily.com.cn)
Updated: 2009-05-31 15:57

WASHINGTON -- Timothy Geithner, who arrived in Beijing Sunday afternoon on his first China trip as the US treasury secretary, will try to persuade China to continue buying US government debt and to import more from the US, as well as seeking the Chinese help over the nuclear issue on the Korean Peninsula.

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Before urging the Chinese to buy more, Geithner will first have to assure the hosts their vast holdings in federal bonds are safe and the Obama administration will do everything it can to preserve the value of the American dollar.

China is now America's biggest creditor. As of March, it held $768 billion of Treasury securities -- about 10 percent of its publicly traded debt.

The US needs China's money to finance US budget deficits, which are soaring as Washington tries to end the recession and bolster its banking system. The administration estimates the budget deficit will hit $1.84 trillion this year. That's four times last year's deficit.

For the Chinese, there is growing nervousness about the explosion of US borrowing. Like any bank worries about its loans, the Chinese have fretted over America's budget gap. In March, Premier Wen Jiabao said, "We've lent a huge amount of money to the US. Of course, we are concerned about the safety of our assets."

The administration insists it isn't worried that the mound of debt it's creating will jeopardize America's sterling AAA bond rating. But treasury officials said Geithner still intends to reassure the Chinese.

Geithner, who is scheduled to meet with Chinese leaders on Monday and Tuesday, plans to stress that the Obama administration sees the $1 trillion-plus deficits for this and next year as temporary. The deficits are necessary to fund a stimulus plan to help lift America out of recession and invigorate a wobbly US banking system, officials say.

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