treasuries China openly concerned about the thrust of the federal government deficit

This morning, in a speech to inaugurate the two days of us-China Summit held in Washington, Barack Obama will reiterate the importance it attaches to its Chinese partner, but also what it expected of him. Since his accession to power, the Democratic President has not spared the openings to China and pointed to at the outset the importance of their relationship by entrusting to the Secretary of State Hillary Clinton and Secretary of the Treasury Tim Geithner - a good connoisseur of the country - the key to the dialogue between the two nations. In February, the appointment of Gary Locke, the first US-China Governor, to the position of Secretary of Commerce has also been interpreted as a gesture of openness towards Beijing.

Avoid any hanging

Trying to "play down" its relations with China and promoting a "positive cooperation" relationship, as it has defined itself Hillary Clinton, administration Obama has carefully avoided, so far, to dwell on thorny issues between the two countries. The issue of civic and religious freedoms is addressed only timidly, in private interviews, and accusations of undervaluation of the yuan against the dollar, summer obnubilaient the Bush team, have them put into mute. They should also be briefly mentioned, today and tomorrow, before the Deputy Prime Minister Wang Qishan and Counsellor of State Dai Bingguo, who take the Chinese delegation. If American industrialists regularly remind that currency Chinese, who had seen its value earn 21 on the dollar between July 2005 and summer of 2008, is now blocked for several months at the level of 6.83 yuan to the dollar, Washington takes into account the high sensitivity of Beijing on this theme. China has seen its exports fall by 22 in annual shift on the first quarter and considers that any additional appreciation of its currency would precipitate the death of thousands of factories in the South of the country working for foreign markets.

Wanting to avoid any unnecessary hanging in this difficult context, Washington should not dwell on the proliferation of bilateral conflicts between the two capitals before the world Organization of the trade (flat electrical steel, intellectual property...) and simply call Beijing to further open its domestic market to foreign firms and to accelerate the process of validation of the agreement on government procurement of the WTO. As it had done in early June, a trip to Beijing, Tim Geithner will explain that this opening is, in the long term, in the interest of China who must, according to him, think about a progressive rebalancing of its growth. "China must restructure its economy and produce, in particular, more of its domestic consumption growth," said a US government source. Having heard repeatedly this American demonstration, the Chinese delegation will ensure that it has largely begun this process, including in his stimulus plan initiated last November. Washington, Wang Qishan comes above all, request the United States to ensure the safety of Chinese assets in dollars. "We will make it clear that China hopes that the United States will apply a responsible economic policy ...". "to maintain the stability of the dollar-based and ensure the safety of Chinese assets in the United States", said Zhu Guangyao, Deputy Minister of finance.

Monetary tightening

First creditor of the United States, with such a portfolio of 802 billion of U.S. treasuries, China openly concerned about the thrust of the federal government deficit. It fears that an escalation of us debt, fuelled by the multiple plans of industrial rescue and revival of the Obama administration, weighs on the value of the greenback and not depreciating, in the end, all of its assets in dollars - all combined products, they are estimated at 1,500 billion.

Last week, Zhu Guangyao had indicated that the Chinese delegation was particularly interested during the two days of dialogue, future strategies of monetary tightening considered by Federal Reserve Chairman Ben Bernanke. Having already managed to boost its growth, which could exceed the 8 throughout 2009, said Beijing hoped a quick rebound in the United States, which alone will enable a recovery in serious hand of the accounts of the nation.