12/04/2008, 00.00
CHINA - USA
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Washington and Beijing commit to "weathering the financial storm"

Two days of “Economic and Strategic Dialogue” begins between the two nations, whose economies are deeply tied. China absorbs US debts, but wants to keep the value of the Yuan low to favour exports in view of a down turn in its economy.

Beijing (AsiaNews) – China and the United States are committed to resolving the global economic crises together.  Beijing has appealed to Washington for greater efforts to stabilise the economy and markets and avoid a worldwide recession.

These are the primary aims of the 2 day “Economic and Strategic Dialogue” meeting which opened today in Beijing.  Wang Qishan, vice premier and co-president of the meeting, has asked the American delegation led by US treasury secretary Henry Paulson, to ensure the United States “takes all necessary measures to stabilise its economy and financial markets as soon as possible and to ensure the security of Chinese investments and interests in the United States”.

Paulson, for his part praised “Beijing’s role in trying to tamp down global economic turbulence”. He also underlined that over the next two days both nations have to find a way to collaborate in international forums to strengthen the global economic system.  The US treasury secretary expects collaboration to reach substantive agreements in five areas: electricity generation, transportation, clean water, clean air, and protecting wetlands and other natural areas.

The two economies are deeply tied. Over 60% of Chinese monetary reserves (equal to 2trillion dollars) are in dollars and a large portion of that is made up of US treasury debts from Fannie Mae and Freddie Mac, taken on by Washington to save the banking giants from bankruptcy.  China however, fears that the situation of the American economy will lead to the devaluation of its reserves and many in Beijing wish to offload the burden of American debts.

Meanwhile, China is feeling the bite of the crises and for 2009 has forecast a growth of 7.5%, the lo west in 20 years,  This is why, as well as a stimulus package, Beijing wants to keep the value of the Yuan low, making a u-turn in its policy of monetary appreciation, to ease Chinese exports.  But this decision has provoked concern from world economies, the US included.

 

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