Biden assures China on its U.S. investments

August 19, 2011

After another day of turmoil in world financial markets, Vice President Biden sought Friday to assure China, the United States’ largest foreign creditor, that its investments in U.S. Treasury securities are safe.

“U.S. Treasurys we’re going to take care of very closely, not merely because China owns 8 percent of them, but because the Americans own 85 percent of them,” Biden told Chinese Premier Wen Jiabao during a Friday afternoon meeting at Zhongnanhai, the main leadership compound in central Beijing.

“We appreciate and welcome your concluding that the United States is such a safe haven, and we appreciate your investment in U.S. Treasurys,” Biden said on the second day of his four-day visit here. “And very sincerely, I want to make clear that you have nothing to worry about.”

Wen thanked Biden for his assurances, which he said would go down well with the Chinese public. Many Chinese academics, economists and citizens voicing their views on the Internet have complained that the government holds too much U.S. debt, making China too dependent on the economic health of the United States and the strength of the dollar.

“You've sent a very clear message to the Chinese public, that the United States will keep its word and its obligations with regard to its government debt,” Wen said, according to an English transcript of his remarks in Chinese. “It will preserve the safety, liquidity and value of U.S. Treasurys. I'm sure that will give a boost to the investors’ confidence in the U.S. economy.”

Wen also said he was “fully confident” that the U.S. economy will rebound. “The prosperity and stability of the United States are important for the whole world,” he said, according to the state-run Xinhua News Service.

Wen’s remarks came after Biden received a similar expression of confidence from Vice President Xi Jinping, China’s likely next leader.

Speaking at the start of a roundtable discussion Friday morning with U.S. and Chinese business leaders, Xi warned of “drastic fluctuations” in financial markets and “destabilizing factors” affecting the world economy. But Xi said that in China’s view, the U.S. economy is “highly resilient, and has a strong capacity for self-repairment.”

Biden, in the morning meeting with Xi, echoed that view. “I have absolute, unequivocal confidence in the strength and vitality and the growth of the American economy,” he said. “No one’s ever made money betting against America.”

Biden met later Friday with President Hu Jintao, who called the vice president an old friend of China’s and said his visit will help enhance cooperation between the two countries, Xinhua reported.

The news agency quoted Biden as saying that President Obama “asked me to come to Beijing to meet you and reaffirm our absolute commitment to developing a strong, enduring and positive relationship with China and to reaffirm our engagement with the world in a much bigger way.”

Biden travels on Saturday to the western province of Sichuan, which was badly damaged by a 2008 earthquake and which lately has been attracting more U.S. companies interested in investing in China’s hinterland.

Biden’s “get-to-know-you” trip has been dominated by discussion of global economic concerns and the turbulence in world stock markets.

Apparently to avoid embarrassment during the trip, China’s government-controlled media censored all news of an ugly, bench-clearing brawl Thursday night between the visiting Georgetown University basketball team and a Chinese military team, the Bayi Military Rockets, playing what was supposed to be a goodwill game. The story of the brawl was deleted after about an hour from two main online news sites and was nowhere to be found Friday on the sites of major newspapers or Xinhua.

Nevertheless, news of the melee spread rapidly through still largely uncontrolled microblogging sites — the Chinese version of Twitter — with many users posting comments calling it a huge loss of face for China, particularly because Biden was visiting.

Biden had attended a Wednesday night game between Georgetown and another Chinese team, but his office had no comment on the Thursday night dust-up. The U.S. Embassy described the brawl as “unfortunate” Friday but had no further comment.

The brawl on the basketball court came after Chinese security agents Thursday morning scuffled with journalists covering Biden’s trip, physically shoving them out of a meeting room after Xi had spoken but while Biden was just beginning his prepared opening remarks. On Friday, before the business leaders’ roundtable, the security agents allowed the journalists to remain until Xi and Biden had spoken.

China’s leadership has been sharply critical of what its state-run media term the United States’ “addiction to debt,” and Beijing has expressed concern about the stability of its holdings of U.S. Treasury securities, valued at more than $1.1 trillion.

On Friday, however, Xi spoke only of the benefits of the United States and China continuing to cooperate “in the face of a complex and severe situation of the world economy.”

He said that China, for its part, would pursue a “proactive fiscal and monetary policy” to manage growth and rein in inflation, which topped 6 percent last month, while avoiding the predictions of some economists that the country was headed for a “hard landing.”

“We are confident that we are able to keep steady and fast economic growth,” Xi said. “There will never be a so-called hard landing for the Chinese economy.”

Biden and Xi both stressed the need for the two countries to continue to invest in each other’s economy. Xi urged the United States to end trade barriers and restrictions on the export of some sensitive high-technology products to China.

Biden said the Obama administration welcomed more Chinese direct investment in the United States, saying, “It means American jobs.” Biden also hinted about a forthcoming announcement on private U.S. commercial deals with China, expected to total about $965 million.

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