Geithner in China: Global economy is improving, but more work to do
Secretary Geithner's comments came at the school where he studied Chinese in the '80s and where he is kicking off his overseas trip. Geithner restated pledges made by the Obama administration that it will cut its huge fiscal deficits, which have worried China, the leading buyer of U.S. Treasury debt. Geithner also promised "very disciplined" future spending, even hinting at a reintroduction of pay-as-you-go budget rules. These comments came as Beijing periodical Global Times (ITALICS) published a survey of Chinese economists indicating that big holdings of U.S. debt are "risky." The country's concerns focus on the belief that rising U.S. debt could push U.S. interest rates higher and weaken the value of dollar-denominated debt.
Geithner did note that there are signs of improvement in the global economy, but not enough to change the International Monetary Fund's forecast that the global economy will shrink for the first time in 60 years in 2009. He stated that the "global recession seems to be losing force," continuing to note that the U.S. financial system is healing and the world will avoid financial collapse and global deflation. Geithner feels that China is in "an enviably strong position" concerning the global credit crisis, warning that the "recession is still powerful in dangerous" in most economies.
The Treasury Secretary believes that there will be opportunities for the U.S. and China to invest in each other's economies. However, what I find interesting is that Geithner tried to calm any Chinese concerns that its "vibrant export economy" may be targeted by U.S. lawmakers, who may succumb to pressures imposed by soaring American jobless numbers. Geithner assured his audience that the Obama administration would resist any such moves. Perhaps it is just me, but I think that the current administration should be a bit more worried about employing American citizens than assuring China that it will be able to continue exporting its goods. Yes, I know this was probably more a politically related comment than anything else, but you know that these comments will make it to American sites and analysts.
Yes, the Chinese economy is a major player in our economy, but I think we need to get things straightened out here at home before we go assuring foreign investors that they can rely on our economy to help theirs. Some will argue that foreign investors are a major step in our own economic recovery, but it is far more important to get Americans employed. Perhaps imports from overseas can help employ Americans -- but iconic American brands are going bankrupt and we are worrying about bolstering another country's export business? Geithner did mention U.S. corporate restructurings, saying that the "process is not over yet." Reassuring words for all, right?