英语角

Geithner Put on Spot as Balance of Power Shifts

If Tim Geithner did not realise it already, the US Treasury secretary found out on his first official visit to Beijing recently that he is dealing with a more self-confident, and sceptical, China.

After a speech at Peking University, Mr Geithner faced tough questions about US failures that contributed to the global financial crisis, as well as demands that China should now be treated as an equal in global economic issues.

One student suggested that, given the US's need for economic support from the Chinese government, he should in return advise Washington to stop selling weapons to Taiwan. Another asked if China's investments in US government securities were secure.

Some of the concern about the outlook for the US economy was echoed in his first round of talks with Chinese financial officials. Wang Qishan, vice-premier, also brought up the safety of China's financial assets. "What is important to me is the issue of our investments in US debt," he said, according to a person present at the talks.

Mr Geithner got off a rocky start in his relations with China earlier this year when, in his confirmation hearings, he accused Beijing of "manipulating" its currency.

But on this visit he struck a diplomatic tone. For every point he made about the need for China to restructure its economy, he matched it with self-criticism about US economic weaknesses or a pledge of reform.

He tried to reassure his audience at Peking University that the administration would do what was necessary to bring its budget under control, reducing the fiscal deficit to about 3 per cent of gross domestic product.

He told the audience that temporary investments and tax incentives aimed at stimulating private demand would eventually expire. "We will have to be very disciplined in limiting future commitments through the reintroduction of budget disciplines, such as pay-as-you go rules," he said. In addition, he promised to build a system of financial regulation that would be more conservative and give higher priority to protecting consumers.

His remarks were aimed at addressing concern in Beijing, emphasised repeatedly by officials in recent months, that the US's ballooning public debt could trigger inflation and a depreciation of the dollar and put China's financial investments in jeopardy. With about 70 per cent of its near $2,000bn (1,428bn, ￡1,250bn) reserves tied up in US government assets, China is the largest foreign holder of Treasury bonds.

However, Mr Geithner also told his audience that the economic crisis meant China would have to make changes to its own growth model, reducing the importance it has placed on exports. "In the US, saving rates will have to increase, and the purchases of US consumers cannot be as dominant a driver of growth as they have been in the past," he said.

"Growth [in China] that is sustainable will require a very substantial shift from external to domestic demand." Such a shift would require a more flexible currency regime.

Mr Geithner also pledged support for a bigger Chinese role in international financial institutions, "that was commensurate with China's importance in the global economy".□

Give up Your Seat to a Lady

Little Johnny said to his mother "Mom, when I was on the bus with Daddy this morning, he told me to give up my seat to a lady."

"You've done the right thing." says Mommy.

"But Mommy, I was sitting on Daddy's lap."