Thursday, May 20, 2010

And they worshipped the dragon which gave power unto the beast:..... (Revelation 13:4)

China to US: Put Your Fiscal House in Order

Thursday, 20 May 2010
By: Reuters

Sovereign debt troubles in Europe underscore how important it is for the United States to control its own borrowing as its indebtedness reaches concerning levels, a senior Chinese official said on Thursday.

With China facing criticism for holding its currency in a de facto dollar peg, assistant finance minister Zhu Guangyao shifted attention to Beijing's own worries about U.S. policies, especially its soaring deficit, ahead of high-level bilateral meetings next week.

There will be "quiet discussions" about the yuan at the Strategic and Economic Dialogue, but external pressure will only delay the exchange rate reform that China wants to implement, he told a news conference.

The global economy's more urgent need is for financial conditions to stabilize in Europe in the wake of Greece's debt woes, Zhu said.

"The European sovereign debt crisis is a challenge not just for the countries that are party to it, such as Greece. In fact, it is a challenge to the stability of the entire international financial market," he said.

"It concerns the recovery of the entire international economy, and so it demands a common response from the international community," he said.

China will look to coordinate its economic policies with the United States as a buffer against the turbulence and would also like the G20 group of nations to play a role in strengthening the global response, Zhu said.

But the United States needs to take a hard look at its own fiscal situation in the light of what has happened in Europe, he said.

"We hope that the U.S. deficit will fall as a proportion of GDP as the economy recovers and reach a sustainable level," Zhu said.

This is a matter of concern for China and it has noted that U.S. officials, including President Barack Obama, have promised to keep an eye on debt levels, he said.

China is the world's largest holder of U.S. Treasuries with $895.2 billion. It added to its stockpile in March for the first time in seven months.

Chinese officials, including Premier Wen Jiabao, last year prodded the Obama administration to avoid pursuing fiscal policies that could erode the value of those treasury holdings.

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