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China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,” said Yu Yongding, a former adviser to the central bank.
The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.
“In talks with Clinton, China will ask for a guarantee that the U.S. will support the dollar’s exchange rate and make sure China’s dollar-denominated assets are safe,” said He in Beijing. “That would be one of the prerequisites for more purchases.”
“These comments are some sort of a threat but of course China can never get such a guarantee,” said Thomas Harr, a currency strategist at Standard Chartered Plc in Singapore. The U.S. may assure China that it will clean up the financial system and that it “won’t push for a weaker dollar but they can’t promise not to increase the fiscal deficit,” he said.
Originally posted by Keyhole
reply to post by projectvxn
That's about what I was thinking!
The Chinese government doesn't REALLY have that big of a choice with the share of their GNP that the USA supplies to them!
Their just HOPING that the USA will get out of this crisis fine, with some help from them, and then they will too!
[edit on 2/11/2009 by Keyhole]
Originally posted by projectvxn
reply to post by SLAYER69
Yes for now. But if you put MSG and sugar on a turd you can sell it as a chocolate donut.