20090220 hillary clinton 84940739 18
Secretary of State Hillary Clinton waves upon leaving for Beijing at a military airbase in Seongnam, south of Seoul -- February 20, 2009 - 


Steve Chiotakis: Secretary of State Hillary Clinton travels to Beijing with a lot on her plate: climate change, North Korea, human rights, to name a few. Let's bring in our China bureau chief Scott Tong in Shanghai… Scott, we know what's on Secretary Clinton's agenda. What's on the mind of Chinese leaders?

Scott Tong: Protectionism. They are really concerned about the "Buy American" language that just came out of the American stimulus package. What it does is it freezes out of the U.S. market certain steel-exporting countries like China. And China knows what it's doing if it decides to retaliate. That's what the U.S. business community here is worried about, that Beijing will come out and say, you know what, we're not going to buy from Boeing anymore, we're going to buy from Airbus; we're going to buy Seaman's out of Germany instead of Westinghouse. And the point that they make is, do we really want American industry locked out of China, which is one of the few big economies on the planet that's still growing these days?

Chiotakis: And for China, what's the risk of friction here? I mean it owns billions and billions of dollars in U.S. government bonds right now, correct?

Tong: Well, $700 billion or so right now, and advisers to the government say that Chinese officials are going to look Secretary Clinton in the eye and say, we want some guarantee from the U.S. government that our bonds are secure. Because in the future, we're going to think about buying more, and we want some kind of confidence to come out of Washington. On the other hand, fine -- if China decides it wants to sell off or put its money elsewhere, the question is, where? And right now, there are no other viable places to put it, and Chinese officials say that. I mean, there is a reason currency traders sold off their Australian currency and their Korean currency in this global financial crisis and they bought American dollars, because that's where the security is right now.

Chiotakis: All right, Marketplace's Scott Tong joining us from Shanghai. Scott, thank you.

Tong: You're welcome, Steve.

Follow Scott Tong at @tongscott