By Stephanie Ho
01 June 2009
U.S. Treasury Secretary Timothy Geithner is reassuring the Chinese government that its huge holdings of dollar assets are safe. As evidence of the importance of the Sino-American relationship, China is Secretary Geithner's only destination on this trip. His official duties in Beijing began Monday, with a speech at Peking University, where he attended in 1981. Geithner says it is crucial for the United States and China to work together to effectively combat the global economic downturn.
"How successful we are in Washington and in Beijing will be critically important to the economic fortunes of the rest of the world," he said. China is the biggest foreign owner of U.S. Treasury bonds. American data shows that China held $768 billion in treasury securities as of March.
The English edition of the Beijing-based Global Times newspaper ran an article Monday in which 23 Chinese economists expressed deep concern that American debt poses great risks to the Chinese economy. In response to a student's question about this issue, Geithner said Chinese assets are very safe.
The American official renewed pledges that the Obama administration will cut its huge fiscal deficits and promised future spending that would be, in his words, "very disciplined." Speaking about major news back in the United States, Geithner says he is optimistic General Motors and Chrysler will emerge from bankruptcy, without needing government assistance.
"Their failure would have had a very, very substantial cost to the economy, as a whole," he said. "So the president decided that we would be willing to provide support if there was in place the kind of comprehensive restructuring plan to allow them to emerge viable as private entities, over time."
Geithner met with some of his former Chinese professors in Beijing and visited a Ford Foundation economist training program set up by his father. He is to meet President Hu Jintao and Premier Wen Jiabao on Tuesday.