China skeptical about Geithner message
TEXT OF STORY
Kai Ryssdal: Timothy Geithner was in Beijing today. The Treasury Secretary is in China for consultations with America’s largest lenders. He tried to assure them that their huge investments in U.S. debt — on the order of a trillion dollars or more — are safe. Chinese leaders have been openly squeamish lately about Washington’s ballooning deficits and the instability of the U.S. economy. And Geithner’s message today, that Obama administration can cut its debt and save the U.S. banking and auto industries allat the same time, was met with some skepticism as our Washington bureau chief John Dimsdale reports.
JOHN DIMSDALE: When Secretary Geithner insisted to a Peking University student that China doesn’t need to worry about the safety of its U.S. investments, the audience laughed. Donald Straszheim of Straszheim Global Advisers travels frequently to China and isn’t surprised by that reaction.
DONALD STRASZHEIM: We have no leverage with them as far as I can tell. Most recent trips I’ve been there, its all been skepticism and nervousness about our markets, our economy, our economic management, which is understandable. China is going to listen politely but go their own way.
But China won’t get very far without the U.S. says Greg Mastel, a trade policy adviser to the Washington law firm of Akin Gump.
GREG MASTEL: We have as much influence over them in the sense that we are literally too big to fail from China’s perspective. So, they’d be among the world’s biggest losers if the U.S. economy went into the tank. Not to mention we’re the world’s largest market for Chinese goods, so there are a lot of toys and games that wouldn’t find a consumer if it weren’t for the U.S.
Geithner told China’s leaders they can help the U.S. recover by reducing cheap exports and promoting Chinese domestic consumption. That would increase demand for more U.S. exports as well. That, in turn, could balance the lopsided trade between the two countries. But Straszheim says China, just like the U.S. and every other country, will continue to keep its currency cheap to boost its own exports.
In Washington, I’m John Dimsdale for Marketplace.
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