New US Ambassador Reassures Beijing about the U.S. Dollar
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China shows concern about debt repayment
Significant investments and the faltering dollar causes China
to consider the safety of their investment in the U.S.
S&P downgrade of America’s credit has China is concerned about the strength of the dollar after S&P’s downgrade of America’s credit rating.
A Forbes article indicates China need not worry about U.S. Investments. Gary Locke, new U.S. ambassador to China, reassured the Chinese press there was no concern about the safety of the U.S. dollar. The ambassador appeared publicly for the first time since President Obama appointed him the first Chinese-American to represent the U.S. in Beijing. Ambassador Locke told Chinese officials that their U.S. investments are safe. (Vladimir Putin has expressed similar concerns.)
Much of Beijing’s $3.2 trillion foreign exchange reserves are invested in U.S. government bonds. Locke reminded Chinese reporters that despite the downgrade, investors still treat the American Treasury as a global safe haven asset for international investors. It’s a clear indication that investments in the U.S. are safe, secure and that the economy, while having its challenges, is still strong, Locked stated during his debut meeting with members of the media outside his new Beijing home.
When U.S. credit was downgraded from AAA to AA+ on Friday, August 5, by Standard & Poor’s, the financial company cited a lack of political will to tackle the country’s growing fiscal deficits. China is the biggest holder of U.S. bonds. The country lambasted Washington for its inability to get its financial house in order. China accounts for around 10% of U.S. government debt—$3.2 trillion in bonds.
New US ambassador to China Gary Locke was surrounded by journalists outside his residence in Bejing on Sunday during his first meeting with the media after arriving on Friday night.
The China Daily newspaper reported that Locke emphasized importance of bridging differences. Washington’s fiscal policy, and the uncertainty it has caused for Beijing’s large holdings of dollar assets are under fire in the Chinese media. Beijing urged Washington to take “responsible” measures to raise market confidence in the dollar and US government debt.
The U.S. Treasury department reported that China increased its financial holdings in the U.S. by $7.3 billion in May 2011 after investing additional funds in April 2011.
When the Chinese asked Locke about the America’s problems, Locke said President Barack Obama and Congress mapped out a path ensuring the fiscal integrity of the US.
Locke noted that global investments in the United States is a clear indication that investment in the US is safe, secure and that the economy, while having its challenges, is still strong.
He also noted, My wife and our children are very excited to be moving here to build new friendship between the people of the US and China, and to continue to expand our two countries’ growing cooperation and collaboration on key bilateral and international issues.
Locke joined the Obama administration in March 2009. He is the former two-term Democratic governor of Washington state. The 61-year-old Locke, was as nominated by Obama in March, replaced Jon Huntsman, who stepped down to seek the Republican nomination for the 2012 presidential election. Locke’s grandfather, left China to work in Washington state as a servant paid in English lessons.
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Locke reminded Chinese reporters that despite the downgrade, investors still treat the American Treasury as a global safe haven asset for international investors . . .
And there you have it, we get a down-grade and investors still run to stack their cash in U.S. Treasury Bonds. Crisis, what crisis?
It’s a game that banks and countries play, in the meantime we have to bite the bullet so they can get a return on their investment.
Mr. Ender, we have much of a crisis as the Tea Party was able to create. Stop seeing the glass as half empty.
We have some crisis.