- "Chinese assets are very safe," Geithner
said.
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- His answer drew loud laughter from his student audience
at Peking University ...
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- * Dollar assets are safe, Geithner assures China
- * Recession losing force; U.S., China must alter growth
tack
- * Backs strong dollar, calls for more flexible yuan
- * China says cooperation can boost global confidence
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- BEIJING, June 1 (Reuters) - U.S. Treasury Secretary Timothy
Geithner on Monday reassured the Chinese government that its huge holdings
of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.
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- A major goal of Geithner's maiden visit to China as Treasury
chief is to allay concerns that Washington's bulging budget deficit and
ultra-loose monetary policy will fan inflation, undermining both the dollar
and U.S. bonds.
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- China is the biggest foreign owner of U.S. Treasury bonds.
U.S. data shows that it held $768 billion in Treasuries as of March, but
some analysts believe China's total U.S. dollar-denominated investments
could be twice as high.
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- "Chinese assets are very safe," Geithner said
in response to a question after a speech at Peking University, where he
studied Chinese as a student in the 1980s.
- His answer drew loud laughter from his student audience, reflecting
skepticism in China about the wisdom of a developing country accumulating
a vast stockpile of foreign reserves instead of spending the money to raise
living standards at home.
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- But later in the day, Chinese Vice Premier Wang Qishan
said it was important for the two nations to show the world they are working
together through their joint economic dialogue.
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- "We must through our dialogue send a clear signal
that China and the U.S. are engaged in practical cooperation to address
the crisis," Wang told Geithner, according to the Chinese Foreign
Ministry's website (www.mfa.gov.cn).
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- "This is important for boosting confidence and encouraging
global financial stability and economic revival," said Wang.
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- In his speech, Geithner renewed pledges that the Obama
administration would cut its huge fiscal deficits and promised "very
disciplined" future spending, possibly including reintroduction of
pay-as-you-go budget rules instead of nonstop borrowing.
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- "We have the deepest and most liquid markets for
risk-free assets in the world. We're committed to bring our fiscal deficits
down over time to a sustainable level.
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- "We believe in a strong dollar ... and we're going
to make sure that we repair and reform the financial system so that we
sustain confidence," he said.
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- Geithner also offered strong backing for a bigger Chinese
role in international policymaking.
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- "China is already too important to the global economy
not to have a full seat at the international table," he said.
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- ECONOMY LOOKING UP
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- Geithner, who is due to meet President Hu Jintao and
Premier Wen Jiabao during two days of talks, described the recession as
still "powerful and dangerous" in much of the world.
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- Read more - http://www.reuters.com/ar...De
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