By Rob Delaney and Rebecca Christie,Bloomberg
Even the Communists are concerned about our reckless spending
Treasury Secretary Timothy Geithner pledged to rein in the U.S. deficit as China underscored concern about preserving the value of its $801.5 billion of Treasury holdings.
The U.S. will ensure a “sustainable” deficit by 2013,Geithner said at the beginning of the first round of Strategic and Economic Dialogue talks under President Barack Obama in Washington. China is “concerned about the security of our financial assets,” Assistant Finance Minister Zhu Guangyao said.
In a shift from meetings under the Bush administration,officials indicated there were few signs of tension over the value of China’s yuan,which U.S. lawmakers have labeled as artificially cheap and an aid to Chinese exports. That may be because the “best idea is just to keep the yuan-dollar rate stable” given U.S. need for Chinese demand for Treasuries,said Ronald McKinnon,a professor of economics at Stanford University.
“The Chinese are trapped with supporting the value of the dollar,” McKinnon said in a telephone interview from Stanford,California. “If they withdrew from the market,there’s a big appreciation” of the yuan as a result that would send China’s exports down,he said.