Top Obama administration officials sought to reassure their Chinese counterparts that the United States was committed to reducing its ballooning deficit, and sought assurances from China that it would retool its economy to be less dependent on exports.
Speaking at the start of the U.S.-China Strategic and Economic Dialogue here, President Obama said Monday that the two countries had a “mutual interest in a lasting economic recovery” and that their partnership was “as important as any bilateral relationship in the world.”
“The current crisis has made it clear that the choices made within our borders reverberate across the global economy -- and this is true not just of New York and Seattle, but Shanghai and Shenzhen as well,” Obama said. “That is why we must remain committed to strong bilateral and multilateral coordination.
“And that is the example we have set by acting aggressively to restore growth, prevent a deeper recession and save jobs for our people.”
But those actions have fueled concerns in China about the value of its large holdings in U.S. bonds, which would be eroded if large budget deficits cause inflation.
Chinese officials had “serious questions” Monday about Obama administration plans to pull back its economic stimulus and financial rescue programs, said David Loevinger, the Treasury Department’s senior coordinator for China affairs and the summit.
White House budget director Peter Orszag told the Chinese that the budget deficit would be reined in, Loevinger said in briefing reporters.
“He was very clear . . . that the fiscal stimulus we put in place was necessary and it’s the right thing and it’s designed to extend through 2011, but it’s not sustainable at the current rate, and we’re committed by the end of the Obama administration to bring it down to a sustainable level,” Loevinger said.
“What was most important to the Chinese was to hear about the general trajectory of our policies,” he said.
Treasury Secretary Timothy F. Geithner, a former Peking University student who has extensive expertise on Asian financial issues, again urged China to continue turning its economy from one dependent on exports to the United States and other nations into one whose growth can be sustained by its own population.
“China’s success in shifting the structure of the economy toward domestic-led growth, including a greater role for spending by China’s citizens, will be a huge contribution to more rapid, balanced and sustained global growth,” Geithner said in his opening remarks. Among those in attendance were Chinese State Councilor Dai Bingguo and Vice Premier Wang Qishan.
Dai said that the recession had put U.S. and China “in the same big boat that has been hit by fierce wind and huge waves,” and that the nations would “try to cross the stormy water together.”
But though the interests of the U.S. and China have “never been interwoven so closely,” he said, the two countries can’t agree on everything.
“The United States will never become China, and China will never become the United States,” he said.
U.S. officials said the focus of the first day of talks was very broad.
Climate change is one area in which officials from the two countries will wrangle. China has resisted the U.S. push for caps on pollution out of fears they would limit economic growth.
Obama stressed that he does not view China as a threat, but rather as a partner in solving major global issues, including climate change.
China should do the same, he said.
“Some in China think that America will try to contain China’s ambitions; some in America think that there is something to fear in a rising China. I take a different view,” Obama said.
“I believe in a future where China is a strong, prosperous and successful member of the community of nations, a future when our nations are partners out of necessity, but also out of opportunity,” he said.