Biden Tells Wen ‘You Have Nothing to Worry About’ Over Debt
Vice President Joe Biden
Lintao Zhang/Getty Images
Vice President Joe Biden.
Vice President Joe Biden. Photographer: Lintao Zhang/Getty Images
Vice President Joe Biden told Chinese Premier Wen Jiabao his government doesn’t need to worry about the safety of Treasuries as the world’s biggest overseas holder of U.S. debt.
“U.S. Treasuries we’re going to take care of very closely, not merely because China owns 8 percent of them; Americans own 85 percent,” he said when the two men met today in Beijing, where he is on the second day of a tour of China. “Very sincerely, I want to make clear you have nothing to worry about,” Biden said, adding he and Wen shared an “absolute and mutual confidence in the U.S. economy.”
Wen had earlier told Biden he had sent a clear message to reassure the Chinese people regarding the safety of Treasuries. Biden’s trip follows the first ever downgrade of U.S. debt by Standard & Poor’s, which said political divisions in Washington were preventing the country from tackling its fiscal deficit.
“I have absolute, unequivocal confidence in the strength and vitality and the growth of the American economy,” Biden said. “No one’s ever made money betting against America.”
Biden’s comments came as global stocks fell on concern the U.S. economy is faltering and Europe’s debt crisis will spread. The MSCI All-Country World Index declined 1.5 percent at 8:59 a.m. in London and the Stoxx Europe 600 Index slumped 2.5 percent, extending yesterday’s 4.8 percent plunge. S&P 500 Index futures dropped 1.6 percent. Crude oil fell 3.3 percent in New York and gold topped $1,850 an ounce for the first time.
Confidence
“There’s a total lack of confidence in policy makers’ ability to defuse the situation,” said Nader Naeimi, a Sydney- based strategist for AMP Capital Investors Ltd., which manages almost $100 billion. “Fear is breeding fear now.”
Biden’s counterpart Xi Jinping, the man most likely to replace Chinese President Hu Jintao in 2013, earlier said China and the U.S. needed to work together to restore confidence in the face of an “intensified” upheaval of the global economy.
A day after S&P on Aug. 5 cut U.S. debt to AA+ from AAA, China’s official Xinhua News Agency issued a warning: “The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone.”
Before Biden spoke Wen told him: “It’s particularly important that you sent a very clear message to the Chinese public that the United States will keep its word and its obligations with regard to its government debt. It will preserve the safety, liquidity and value of U.S. Treasuries.”
Haven
While S&P’s downgrade led to a roller coaster week for U.S. stock indexes and sparked a global equity selloff, investors snapped up Treasuries on signs of slowing growth and a widening debt crisis in Europe.
The yield on generic 10-year government debt fell to a record low 1.97 percent yesterday and has dropped almost 30 percent since S&P said it may cut the U.S. rating on July 14.
China’s Treasury holdings of $1.17 trillion, while down from their high of $1.18 trillion in October, have increased for the past three months, data compiled by Bloomberg show.
“We appreciate and welcome your concluding that the United States is such a safe haven and we appreciate your investment in U.S. Treasuries,” Biden said.
After Biden met with Wen at the Leadership Compound, he met with Hu at the Great Hall.
Biden told Hu that President Barack Obama asked him to come to Beijing “to reaffirm our absolute total commitment to a strong and enduring positive relationship with China.”
To contact the reporter on this story: Kate Andersen Brower in Beijing at kandersen7@bloomberg.net
To contact the editor responsible for this story: Ben Richardson at brichardson8@bloomberg.net
Rate this Page