You might have trouble telling which country is the world’s superpower with the world’s largest economy, and which is the still relatively poor nation attempting to push its way onto the international stage.
Reports the New York Times:
The Chinese premier Wen Jiabao expressed concern on Friday about the safety of China’s $1 trillion investment in American government debt, the world’s largest such holding, and urged the Obama administration to provide assurances that its investment would keep its value in the face of a global financial crisis.
Speaking at a news conference at the end of the Chinese parliament’s annual session, Mr. Wen said he was “worried” about China’s holdings of Treasury bonds and other debt, and that China was watching United States economic developments closely.
“President Obama and his new government have adopted a series of measures to deal with the financial crisis. We have expectations as to the effects of these measures,” Mr. Wen said. “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”
He called on the United States to “maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”
Mr. Wen raised the concerns at a session in which he touted China’s comparatively healthy economy and said that his government would take whatever steps were needed to end the country’s economic slump. He also predicted that the world economy would improve in 2010.
The confident performance underscored the growing financial and geopolitical importance of China, one of the few countries to retain massive spending power despite slowing growth.
China has the world’s largest reserves of foreign exchange, estimated at $2 trillion, the product of years of double-digit growth.
Prime Minister Wen’s comments were conveniently timed, following a well-publicized naval game of chicken between a U.S. vessel and several Chinese boats in the South China Sea. But the Chinese premier still has a point. With the U.S. government stuck with unfunded liabilities in excess of $100 trillion even before it devoted trillions of dollars more to bail out just about anyone associated with the auto, housing, and financial industries, just how is Washington going to manage the new debt tsunami unleashed by the economic crunch? Americans desperately want to know the answer to that question.
And, embarrassingly, so too do the Chinese.