Vice-premier asks Washington to keep financial markets stable
Cary Huang, Shi Jiangtao and Al Guo in Beijing 5 December 2008
Vice-Premier Wang Qishan urged Washington to protect China’s investment in the United States and to stabilise its economy, as high-level talks at the fifth semi-annual Sino-US “strategic economic dialogue” meeting in Beijing produced some results in energy and environmental co-operation.
Mr. Wang made the request as his counterpart, US Treasury Secretary Henry Paulson, praised Beijing’s “responsible role” in helping ease the impact of the global financial crisis. Mr. Paulson played down the most controversial subject, the currency exchange rate, in his opening statement.
“We hope the US side will adopt every necessary measure to stabilise its economy and financial markets, and ensure the safety of China’s assets and investments in the United States,” Mr. Wang said.
In a briefing last night, Minister of Commerce Chen Deming said Mr. Wang was speaking in general terms as “all governments would be concerned about their countries’ investments in other countries at a time of economic crisis”.
China overtook Japan at the end of September to become the No1 debt holder of US government bonds, with an outstanding balance of US$585 billion. China’s commercial banks and government investment vehicles were estimated to have invested roughly the same amount of money in the US market, pushing China’s total exposure in the US over US$1.1 trillion.
Zhao Xijun , economics professor at Renmin University, said China could legitimately require the US to take care of its financial market.
Mr. Wang and Mr. Paulson, accompanied by more than a dozen officials from both sides, exchanged their opinions on a wide range of issues in yesterday’s closed-door meeting. Both nations, the world’s biggest polluters, signed seven accords yesterday to co-operate in projects that promote energy and environmental conservation.
“Today, we mark the beginning of what I believe will be a powerful model” for future energy agreements, Mr. Paulson said at the signing ceremony.
In separate briefings after the talks, Chinese and US officials pledged both nations would work together to curb trade protectionism.
Mr. Chen dismissed speculation that Beijing might let its currency depreciate in an effort to reverse the decline in exports, saying such a move would not help. The yuan dropped on Monday by the most since the nation scrapped a fixed exchange rate in 2005, triggering speculation that the government was switching to a policy of depreciation.
“Fluctuations of the yuan’s exchange rate have been normal this week, with the yuan depreciating only because the dollar has been so strong,” Mr. Chen said. “The cause of the current problem with exports is shrinking demand, not problems with currencies.” Beijing was committed to maintaining a stable exchange rate, he said.
In the US briefing, trade representative Susan Schwab said this was “the worst time for the beggar-thy-neighbour protectionism policy”. Both countries have seen the risks of downward spirals in terms of trade protectionism and its international repercussions, and have pledged to resist such policies.
National Development and Reform Commission vice-chairman Zhang Xiaoqiang said the two sides had talked about the foreign exchange rate issue yesterday morning, and China promised to maintain its policy of pushing through the reforms.
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US Urged to Protect China’s Investments
Vice-premier asks Washington to keep financial markets stable
Cary Huang, Shi Jiangtao and Al Guo in Beijing
5 December 2008
Vice-Premier Wang Qishan urged Washington to protect China’s investment in the United States and to stabilise its economy, as high-level talks at the fifth semi-annual Sino-US “strategic economic dialogue” meeting in Beijing produced some results in energy and environmental co-operation.
Mr. Wang made the request as his counterpart, US Treasury Secretary Henry Paulson, praised Beijing’s “responsible role” in helping ease the impact of the global financial crisis. Mr. Paulson played down the most controversial subject, the currency exchange rate, in his opening statement.
“We hope the US side will adopt every necessary measure to stabilise its economy and financial markets, and ensure the safety of China’s assets and investments in the United States,” Mr. Wang said.
In a briefing last night, Minister of Commerce Chen Deming said Mr. Wang was speaking in general terms as “all governments would be concerned about their countries’ investments in other countries at a time of economic crisis”.
China overtook Japan at the end of September to become the No1 debt holder of US government bonds, with an outstanding balance of US$585 billion. China’s commercial banks and government investment vehicles were estimated to have invested roughly the same amount of money in the US market, pushing China’s total exposure in the US over US$1.1 trillion.
Zhao Xijun , economics professor at Renmin University, said China could legitimately require the US to take care of its financial market.
Mr. Wang and Mr. Paulson, accompanied by more than a dozen officials from both sides, exchanged their opinions on a wide range of issues in yesterday’s closed-door meeting. Both nations, the world’s biggest polluters, signed seven accords yesterday to co-operate in projects that promote energy and environmental conservation.
“Today, we mark the beginning of what I believe will be a powerful model” for future energy agreements, Mr. Paulson said at the signing ceremony.
In separate briefings after the talks, Chinese and US officials pledged both nations would work together to curb trade protectionism.
Mr. Chen dismissed speculation that Beijing might let its currency depreciate in an effort to reverse the decline in exports, saying such a move would not help. The yuan dropped on Monday by the most since the nation scrapped a fixed exchange rate in 2005, triggering speculation that the government was switching to a policy of depreciation.
“Fluctuations of the yuan’s exchange rate have been normal this week, with the yuan depreciating only because the dollar has been so strong,” Mr. Chen said. “The cause of the current problem with exports is shrinking demand, not problems with currencies.” Beijing was committed to maintaining a stable exchange rate, he said.
In the US briefing, trade representative Susan Schwab said this was “the worst time for the beggar-thy-neighbour protectionism policy”. Both countries have seen the risks of downward spirals in terms of trade protectionism and its international repercussions, and have pledged to resist such policies.
National Development and Reform Commission vice-chairman Zhang Xiaoqiang said the two sides had talked about the foreign exchange rate issue yesterday morning, and China promised to maintain its policy of pushing through the reforms.
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