China, US to resume high-level, annual discussions

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US Treasury Secretary Timothy Geithner, left, shakes hands with Chinese President Hu Jintao upon arrival for a meeting at the Great Hall of the People in Beijing Tuesday. — AP

BEIJING, June 2 (AP): US Treasury Secretary Timothy Geithner concluded his reassurance tour of China Tuesday, telling leaders of the country that holds the largest share of America's debt that US President Barack Obama was committed to tackling the soaring budget deficits.
The two nations announced that they would launch revamped high level talks the week of July 27, discussions that will not only cover efforts to strengthen economic ties in the midst of a severe global financial crisis but also foreign policy concerns.
The first round of what are scheduled to be annual meetings will take place in Washington with the US delegation led by Geithner and US Secretary of State Hillary Rodham Clinton.
Geithner wrapped his first visit to China since becoming treasury secretary with meetings with both President Hu Jintao and Premier Win Jiabao.
He told Hu that because of the cooperation already demonstrated by the two countries, there were beginning to be "early signs of stabilisation" in a global economy that was battered after the financial crisis hit with force last fall.
"We have already demonstrated the capacity of our two countries to work together on the global stage to lay the foundation for economic recovery," Geithner told Hu at the start of their meeting.
Geithner said earlier that he believed the Chinese understood that the administration was committed to acting decisively to deal with the budget deficits once the economy has started to recover and the financial system has stabilised.
"What I sense is a fair amount of confidence in the dynamism of the US economy, that we will solve this crisis and go back to living within our means," Geithner said in a meeting with reporters. He also delivered the same message in a round of interviews with Chinese media.
Hu told Geithner during their meeting that he appreciated Geithner's efforts to work with Chinese officials to develop a cooperative approach in tackling the financial crisis.
Geithner said that in his talks with Chinese officials they saw the need to move aggressively to pursue efforts to jump-start economic growth and stabilise the banking system even if in the short term that meant rising budget deficits.
Wen in the public part of their discussions Tuesday made no mention of the comments he had made last March about worries over the rising U.S. budget deficits, remarks that triggered shockwaves through the global financial system.
China is the largest holder of US Treasury securities. Wen's comments raised worries that interest rates could suddenly start increasing, perhaps choking off any recovery in the United States, and the dollar could start sinking in value if the Chinese started dumping their vast holdings of US debt.
However, the reception Geithner received on his trip seemed to show that the two countries, the world's largest and third largest economies, were determined to work together cooperatively to deal with the current downturn.
The treasury secretary said in a round of interviews on his last day in China that he had assured Chinese officials that the administration was determined to bring down the size of the deficits once the current crisis has passed.
In an interview with China Daily, Geithner had praise for the actions taken by the Federal Reserve. Geithner said Fed Chairman Ben Bernanke had done an "enormously impressive job in the worst financial crisis in decades."
Chinese officials did not comment publicly on Geithner's reassurances, but judging from the reaction of the college students, Geithner may still have some explaining to do.