U.S. Treasury Secretary Timothy Geithner on Monday said the United States and China must change strategies for boosting growth as U.S. consumer demand wanes, and he offered strong backing for a bigger Chinese role in setting global economic policy.
“China is already too important to the global economy not to have a full seat at the international table,” Geithner said in prepared remarks for delivery to students at Peking University. He said global recession was easing but still “powerful and dangerous” in much of the world.
Geithner, on his first trip to China as U.S. Treasury chief, is holding two days of talks with top Chinese officials but opened his trip at Peking University, where he studied Chinese as a student in the 1980s.
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He renewed pledges that the Obama administration will cut its huge fiscal deficits — a source of worry for China as the top buyer of U.S. Treasury debt — and promised “very disciplined” future spending, possibly including reintroduction of pay-as-you-go budget rules instead of nonstop borrowing.
As Geithner’s visit opened, the Beijing-based Global Times published a survey of Chinese economists who called big holdings of U.S. debt “risky.” China’s concerns center around the risk that rising U.S. debt levels could push U.S. interest rates up and weaken the value of U.S.-dollar denominated debt.