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Clinton Sells China On Securities

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The Washington Post

Published: February 23, 2009

BEIJING - Secretary of State Hillary Rodham Clinton on Sunday urged China to keep investing its substantial foreign-exchange reserves in U.S. Treasury securities, arguing "we are truly going to rise or fall together."

China is the biggest foreign holder of U.S. debt, which helped finance the spending binge that the United States went on before the current economic crisis.

Some experts have expressed concern that China's substantial holding of U.S. debt gives it increased leverage in dealings with Washington, because any halt in Chinese purchases would make it more difficult to finance the government bailout and stimulus packages.

Clinton, in unusually direct comments during an interview with China's Dragon TV before returning to Washington, said that reality made it an imperative for China to keep purchasing U.S. Treasury bonds, because otherwise the U.S. economy would not recover and China would suffer as well.

"Our economies are so intertwined," she said. "The Chinese know that in order to start exporting again to its biggest market ... the United States has to take some drastic measures with the stimulus package. We have to incur more debt.

"I don't think it's realistic to expect that we will see global recovery without Chinese and American cooperation and leadership," she said during an interview Sunday with the popular talk show "One on One."

With the export-heavy Chinese economy reeling from the U.S. downturn, Clinton has sought in meetings with President Hu Jintao, Foreign Minister Yang Jiechi and Premier Wen Jiabao to reassure Beijing that its massive holdings of U.S. Treasury notes and other government debt will remain a solid investment.

Yang responded that China wants to see its foreign exchange reserves - the world's largest at $1.95 trillion - invested safely and to continue working with the United States.

Information from The Associated Press was used in this report.

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