Chinese Premier Wen Jiabao (溫家寶) expressed concern yesterday about its holdings of Treasuries and other US debt, appealing to Washington to safeguard their value, and said Beijing was ready to expand its stimulus if economic conditions worsen.
Saying Beijing is the biggest foreign creditor to the US, Wen called on Washington to see that its response to the global slowdown does not damage the value of Chinese holdings.
“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,” Wen said.
Analysts estimate that nearly half of China’s US$2 trillion in currency reserves are in US Treasuries and notes issued by other government-affiliated agencies. Last month, during her visit to China, US Secretary of State Hillary Rodham Clinton sought to reassure Beijing that Treasury notes and other government debt would remain a reliable investment.
Wen’s comments foreshadowed possible appeals to US President Barack Obama, who will meet with Chinese President Hu Jintao (胡錦濤) at a London summit of leaders of the G20 group of major economies on April 2 to discuss the global financial crisis.
Chinese Foreign Minister Yang Jiechi (楊潔箎) said on Wednesday during a visit to Washington that Beijing wanted to “strengthen macroeconomic policy dialogue” with the Obama administration.
Wen also expressed confidence China could emerge from its economic slump “at an early date,” but said Beijing was ready to expand its 4 trillion yuan (US$586 billion) stimulus to boost growth in the world’s third-largest economy.
Communist leaders worry about rising job losses and possible unrest amid a trade slump that saw Chinese exports fall 25.7 percent last month from a year earlier. They have promised to spend heavily to create jobs and boost exports.
“We already have our plans ready to tackle even more difficult times, and to do that we have reserved adequate ammunition,” the premier said. “That means that at any time we can introduce new stimulus policies.”
Wen and other officials point to rising bank lending, power demand and other signs the stimulus is taking effect. But growth in retail sales is weakening, suggesting it has yet to spur private sector spending and investment, which analysts say will be key to its success.
Wen said Beijing could its growth target this year of 8 percent, despite skepticism by private sector economists, who expect as little as 5 percent.
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