China warns U.S. of dollar concerns
TEXT OF INTERVIEW
Renita Jablonski: The group of leaders from the world’s 20 biggest economies are busy in London trying to come up with new rules to stem the global financial crisis. The latest G-20 draft communique calls for an additional $500 billion for the International Monetary Fund. The extra funding would go to help support emerging economies. There’s still a little debate over how to regulate hedge funds and tax havens. France and Germany are coming down hard on those things. China is also at the G-20 table.
Marketplace’s Scott Tong joins us now from Shanghai. Scott, what kind of objectives does China have for this summit?
Scott Tong: Well, China is trying to be more assertive in the global economy in general. Many think that Chinese officials think the time is ripe to make itself heard more, and this is new. In the last few days, China’s prime minister says he’s worried about Chinese investments in the U.S. dollar, and then the top central banker comes out and raises questions about the dollar’s long-term future as the main currency in the world for global trade. So at one level, China’s just trying to speak a little louder.
Jablonski: When Chinese officials came out and questioned whether hte dollar should no longer be the dominant currency, this certainly made some waves last week. Why take on the dollar? Is China a rival at the G-20?
Tong: Well, I don’t hear a lot of China being a rival to the U.S. as an economic rival, I don’t hear much of that in China. I think the message is more, look, China’s saying, we’ve lent you, the Americans, $1 trillion that you’ve put into your economy, and you better take care of it or else we’ll take our money and shack up wtih someone else — at least our currency will. What China is worried aobut is that the world’s next financial bubble is U.S. financial Treasuries, that Washington is printing os much money that eventually the value of U.S. dollars will plummet.
Jablonski: Well, Chinese President Hu did meet with President Obama yesterday. Did this whole dollar warning thing come up?
Tong: White House officials say it did not come up directly at the meeting. But President Obama did come out of that meeting and did pledge to chop the U.S. budget deficit in half over time. So it sure sounds like Washington knows who its banker is in China. But the other point is, China knows who its customer is. If I lend you, Renita, $1 trillion, I’m kind of stuck with you, too. It’s more of an entangling alliance rather than a rivalry.
Jablonski: Marketplace’s China Bureau Chief Scott Tong. Thanks so much.
Tong: OK Renita, you’re welcome.
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