At the close of China’s National People’s Congress, Premier Wen Jiabao voiced his concern over the US treasuries. Generally viewed as risk-free, the crisis saw the US issuing significant amounts of debt in order to finance the bailouts and the $780bn stimulus package, raising doubts about the safety of country’s securities. “We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. Frankly speaking, I do have some worries,” Mr. Wen said in response to a question. He called on the US to “maintain its credibility, honor its commitments and guarantee the security of Chinese assets.” From the country’s almost $2 trillion in reserves, a big part of it is in USD.
Even with such a huge debt, however, I believe the US government still is and will always be able to meet its obligations. It can retain its risk-free status, although worries at the moment is not completely unsolicited.
In the same conference, he retains confidence that China will be able to meet its growth target of 8% this year. No matter how they do it is already less of an issue because the rest of the world just looks at China’s growth as an overall positive that triggers higher global demand. People have come to equate China’s growth to the growth of the world. “We have already prepared plans to deal with greater difficulties, and have reserved adequate ammunition. We can introduce new stimulus policies at any time,” he said.
He similarly stood firm about the yuan, denying any manipulation as others claim and pointing out demands from exporters to depreciate its currency also exists. Because of the stronger dollar relative to other currencies, Mr. Wen sees this as an appreciation for the currency, perhaps alluding to allegations (by Geithner) that there is manipulation that’s taking place. Nevertheless, he said China alone would decide where the yuan goes from here: “No country can pressure us to appreciate or depreciate” the currency.