What Geithner Took Back Home
Published in Huanqiu
(China) on 4 June 2009
by Yang Bo (link to original)
During his three-day visit in China, from beginning to end, U.S. Treasury Secretary Timothy Geithner’s every word and action was the “focus” of the media. “The safety of U.S. treasury bonds,” “The massive financial deficit in the White House,” “The exchange rate of the R.M.B.” – speculation on the topics Geithner might want to discuss were all over the place. And today, the important question is: What did Geithner take back home after his trip to China?
As the issuer of U.S. treasury bonds and the power holder of the U.S. Treasury, Geithner has naturally taken on the important responsibility of selling U.S. bonds. This was also one of the main reasons for his visit to China, according to mainstream media opinion. With regards to this, Geithner has put in a rather great effort.
In his speech at Peking University, Geithner listed some favorable statistics showing the recovery of the U.S. financial system, the improvement in consumer confidence and the slowdown in the drop of real estate prices. As he displayed his optimism toward the future recovery of the U.S. economy, he also made his stance clear on decreasing the government’s financial deficit, claiming that the financial deficit would be brought “down to a sustainable level over the medium term.”
In terms of controlling inflation, Geithner strongly supports Ben Bernanke, chairman of the Federal Reserve, and believes that he has the ability to keep inflation at a lower, more stable level. Geithner addressed each of the key issues that have directly caused China to have concern about the safety of U.S. bonds: the financial deficit, debt, inflation, and economic recovery. Undoubtedly, he is trying to instill confidence in China, guarantee that the U.S. has the ability to repay debt and create some room for discussion in upcoming high-level meetings.
On the plane headed to China, Geithner stated that the U.S. economy is recovering and that China can feel at ease. It is easy to say China should just relax, but in practical terms, many problems exist. Before Geithner’s trip, the U.S. treasury issued a total of $100 billion in U.S. bonds over three consecutive days. After accumulating to a certain level, uncontrollably issuing bonds will cause inflation, and when the time comes, the U.S. dollar will not only depreciate to a large extent, along with a large-scale devaluing of China’s foreign exchange assets, but the economic recovery of the whole world will suffer the impacts as well. This will definitely make people suspicious: where is the safety in U.S. treasury bonds? What methods will the U.S. take to ensure that investments in the U.S. dollar are safe? Although Geithner wanted to instill confidence in the Chinese, what he ultimately took back to the U.S. was the anxiety of many people.
During his trip in China, Geithner constantly emphasized that the solution to global problems, including restructuring of the financial system, lies in cooperation between China and the U.S. If we put the economic relationship of China and the U.S. into perspective, we can see that it is not simply about buying or selling more U.S. bonds or about whether to institute a floating exchange rate for the R.M.B; it is about creating a win-win relationship.
On a deeper level, the strategic game between China and the U.S. has already become the controlling force over the development of both economies; it has also played a key role in the economic development of the world. After his trip, Geithner will inevitably have a more profound understanding of U.S.-China relations. As Obama’s special representative, Geithner will convey his experiences to Washington and to the U.S. people, and this will undoubtedly lay a strong foundation for the future, whether we are referring to the China-U.S. Strategic Economic Dialogue, which will take place next month, or to the Obama administration’s future handling of U.S.-China issues. We can count this as the second “gift” that Geithner took back to the U.S.
The U.S. and China have already decided to hold the first session of the China-U.S. Strategic Economic Dialogue in the U.S. at the end of July. Perhaps, this is the most substantial result that Geithner can take back to Obama.
Geithner has already left China. Certainly, as he boarded his plane back to Washington, he had a lot more on his mind than just an old photo of him taken in Beijing 28 years ago.
As the issuer of U.S. treasury bonds and the power holder of the U.S. Treasury, Geithner has naturally taken on the important responsibility of selling U.S. bonds. This was also one of the main reasons for his visit to China, according to mainstream media opinion. With regards to this, Geithner has put in a rather great effort.
In his speech at Peking University, Geithner listed some favorable statistics showing the recovery of the U.S. financial system, the improvement in consumer confidence and the slowdown in the drop of real estate prices. As he displayed his optimism toward the future recovery of the U.S. economy, he also made his stance clear on decreasing the government’s financial deficit, claiming that the financial deficit would be brought “down to a sustainable level over the medium term.”
In terms of controlling inflation, Geithner strongly supports Ben Bernanke, chairman of the Federal Reserve, and believes that he has the ability to keep inflation at a lower, more stable level. Geithner addressed each of the key issues that have directly caused China to have concern about the safety of U.S. bonds: the financial deficit, debt, inflation, and economic recovery. Undoubtedly, he is trying to instill confidence in China, guarantee that the U.S. has the ability to repay debt and create some room for discussion in upcoming high-level meetings.
On the plane headed to China, Geithner stated that the U.S. economy is recovering and that China can feel at ease. It is easy to say China should just relax, but in practical terms, many problems exist. Before Geithner’s trip, the U.S. treasury issued a total of $100 billion in U.S. bonds over three consecutive days. After accumulating to a certain level, uncontrollably issuing bonds will cause inflation, and when the time comes, the U.S. dollar will not only depreciate to a large extent, along with a large-scale devaluing of China’s foreign exchange assets, but the economic recovery of the whole world will suffer the impacts as well. This will definitely make people suspicious: where is the safety in U.S. treasury bonds? What methods will the U.S. take to ensure that investments in the U.S. dollar are safe? Although Geithner wanted to instill confidence in the Chinese, what he ultimately took back to the U.S. was the anxiety of many people.
During his trip in China, Geithner constantly emphasized that the solution to global problems, including restructuring of the financial system, lies in cooperation between China and the U.S. If we put the economic relationship of China and the U.S. into perspective, we can see that it is not simply about buying or selling more U.S. bonds or about whether to institute a floating exchange rate for the R.M.B; it is about creating a win-win relationship.
On a deeper level, the strategic game between China and the U.S. has already become the controlling force over the development of both economies; it has also played a key role in the economic development of the world. After his trip, Geithner will inevitably have a more profound understanding of U.S.-China relations. As Obama’s special representative, Geithner will convey his experiences to Washington and to the U.S. people, and this will undoubtedly lay a strong foundation for the future, whether we are referring to the China-U.S. Strategic Economic Dialogue, which will take place next month, or to the Obama administration’s future handling of U.S.-China issues. We can count this as the second “gift” that Geithner took back to the U.S.
The U.S. and China have already decided to hold the first session of the China-U.S. Strategic Economic Dialogue in the U.S. at the end of July. Perhaps, this is the most substantial result that Geithner can take back to Obama.
Geithner has already left China. Certainly, as he boarded his plane back to Washington, he had a lot more on his mind than just an old photo of him taken in Beijing 28 years ago.