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China-U.S. alliance crucial for recovery

John Dimsdale Jul 27, 2009
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China-U.S. alliance crucial for recovery

John Dimsdale Jul 27, 2009
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TEXT OF STORY

Kai Ryssdal: Of course the Chinese aren’t the only ones who buy U.S. government debt. But they do hold a huge chunk of it. With the Treasury Department having to finance bailouts and stimulus packages, the Obama administration’s hoping Beijing will add to its purchases. That makes the talks that got started in Washington today between the world’s biggest and one of the world’s fastest-growing economies all the more important. Our Washington bureau chief John Dimsdale reports.


JOHN DIMSDALE: China is responsible for more than 80 percent of the U.S. trade deficit, not counting oil. And President Obama says there’s a way to use the recession to shrink that imbalance.

PRESIDENT OBAMA: And as Americans save more and Chinese are able to spend more, we can put growth on a more sustainable foundation because just as China has benefited from substantial investment and profitable exports, China can also be an enormous market for American goods.

To realize that potential, Erin Ennis at the U.S. China Business Council, says American negotiators need only remind the Chinese of their dependence on the global economy.

ERIN ENNIS: I don’t think that any of China’s leaders have lost the point that while the discussion about a year ago was about whether China would be able to weather this recession better than anybody else because they had insulated themselves from it. The answer to that clearly was no.

But China’s representatives bring their own agenda. They want assurances that U.S. government efforts to spend its way out of the recession won’t hurt China’s investments in U.S. Treasuries. Steven Schrage at the Center for Strategic and International Studies says China is exercising more economic muscle in its relations with the U.S.

STEVEN SCHRAGE: It started as the U.S. kinda lecturing China. Now China is sending shots across the bow with the United States saying we’re not sure your currency is going to be stable in the months ahead. So there has been more of that push and pull, which is reflective of a mature relationship.

Mature and more complex, he adds.

In Washington, I’m John Dimsdale for Marketplace.

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