Britannia Radio

The outcome of these negotiations is important for all of us. The 
Americans have the life of riley by borrowing cheaply abroad and now 
they can borrow no more and, indeed, are trying with the Chinese not 
to upset the global apple-cart by failure to refinance the vast debts 
held by China in US Treasury bonds. If they failed on that the 
result would be global catastrophe.

So watch these negitiations closely. Who is to be top nation is at 
stake!

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TELEGRAPH 2.6.09

1, Geithner must tell a hard truth to Chinese

By Damian Reece

Tim Geithner has undergone a Damascene conversion since taking 
office. In January the US Treasury Secretary struck a hard line 
against China, accusing the country of "manipulating" its currency 
and provoking a fierce reaction from its leaders. Now, in Beijing for 
his first official visit, Geithner could not be more accommodating. 
Not only is he avoiding forthright language on the yuan, he is 
expressing gratitude for China's fiscal stimulus and reassuring 
Beijing the US is good for its debts.

Such tactics are a pragmatic necessity: America is, after all, 
reliant on the Chinese continuing to buy US government debt, 
particularly now it is planning to borrow up to a trillion dollars a 
year.

However, Geithner's stance in January did not lack truth. China's 
manipulation of its currency helped cause the global imbalances at 
the core of the financial crisis. It helped China boost its exports 
and prolong a boom, but at the cost of distorting global capital 
flows. Granted, Western policymakers must share the blame for 
economic imbalances e_SEnD every surplus is matched by a deficit.

Eventually China must allow its currency to float and learn to spend 
its surplus (on health and pensions, for instance) as well save it. 
There would be no harm in Geithner reminding the Chinese of this on 
his visit, however diplomatically.
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2. Geithner insists Chinese dollar assets are safe

US Treasury Secretary Tim Geithner was laughed at by an audience of 

Chinese students after insisting that China's US assets are safe.

By Edmund Conway

In his first official visit to China since becoming Treasury 
Secretary, Mr Geithner told politicians and academics in Beijing that 
he still supports a strong US dollar, and insisted that the trillions 
of dollars of Chinese investments would not be unduly damaged by the 
economic crisis. Speaking at Peking University, Mr Geithner said: 
"Chinese assets are very safe."

The comment provoked loud laughter from the audience of students. 
There are growing fears over the size and sustainability of the US 
budget deficit, which is set to rise to almost 13pc of GDP this year 
as the world's biggest economy fights off recession. The US is 
reliant on China to buy many of the government bonds it is planning 
to issue but Beijing's policymakers have expressed concern about the 
strength of the dollar and the value of their investments.

However Chinese Vice Premier Wang Qishan said that the two countries 
were working closely together to fight the economic crisis.