US reassures China on investment

http://news.bbc.co.uk/2/hi/asia-pacific/7942924.stm

US reassures China on investment

BBC, 2009/03/13

The White House has sought to assure China that its $1 trillion (£0.7tn) in investments in the United States is safe despite the economic downturn.

"There is no safer investment in the world than in the United States," said White House spokesman Robert Gibbs.

Chinese Premier Wen Jiabao earlier voiced concern and urged the US to remain "a credible nation".

China's huge US bond holdings make it the country with the most money invested in America.

Mr Wen added that his government was ready to introduce new economic stimulus measures "at any time".

He said there was enough "ammunition" to add to a 4tn yuan ($586bn; £421bn) package already announced.

He was speaking at the end of China's annual parliamentary session - the only time he takes questions from reporters.

'Sound stewards'

Earlier, US President Barack Obama's chief economic adviser sought to assure China its investments in the US were safe.

Larry Summers said Washington would be "sound stewards" of the investments.

Mr Summers said there was an "excess of fear" among Americans about the state of the economy.

He added there were some signs that were modestly encouraging, such as improved figures on consumer spending.

President Obama's economic team are doing their best to lift the gloom and talk up the positives about the US economy, the BBC's Jonathan Beale reports from Washington.

This is proving hard as America spends and borrows billions of dollars to lift itself out of recession.

China is now effectively bankrolling much of that debt, our correspondent notes, with $1tn invested in US treasury bonds and other assets.

Mr Wen had said: "I'd like to take this opportunity here to implore the United States... to honour its words, stay a credible nation and ensure the safety of Chinese assets."

Need for confidence

Although Mr Wen said he expected China and the rest of the world to be better off in 2010, he said the government was ready to face tougher times.

REYNOLDS' CHINA
“ [Mr Wen's] news conference has its own stately pace - it's been going on for an hour and a half and we're only on to our sixth question ”

"We have prepared contingency plans to handle greater difficulties," he said.

"We have prepared enough ammunition and we can launch new economic stimulus policies at any time."

He said confidence was "more important than gold or money" in overcoming the world's financial troubles.

"Only when we have confidence can we have courage and strength, and only when we have courage and strength can we overcome difficulties."

Official figures released this week showed that Chinese exports had plunged by more than a quarter in February from a year ago, to $64.9bn, and imports fell by 24.1% to $60.1bn.

The Chinese government is targeting annual growth of 8% and wants to boost consumption and raise consumer demand.

Correspondents say the Communist Party fears that if annual growth slips below 8%, there will be social instability.