China to voice concerns over asset safety at dialogue with US

(Xinhua)
Updated: 2009-07-23 10:40

China will ask the United States to protect its investment assets at the first strategic and economic dialogue next week, a Chinese finance official said Wednesday.

"I believe the Chinese delegation, especially Vice Premier Wang Qishan, will explicitly raise the hope that the United States should make responsible economic policies, including financial and monetary policies, to maintain stability of the dollar and safeguard safety of China's assets," said Zhu Guangyao, assistant Finance Minister.

Zhu made the remarks at a news briefing on the first China-US strategic and economic dialogue to be held in Washington from July 27 to 28.

State Councilor Dai Bingguo and Vice Premier Wang Qishan and US Secretary of State Hillary Clinton and Treasure Secretary Timothy Geithner will co-chair the dialogue.

China, the biggest holder of US Treasury bonds, has raised concerns that the falling US dollar could hurt the value of China's US dollar assets. In March, Premier Wen Jiabao called on the United States "to guarantee the safety of China's assets."

"As an important investor, China is deeply concerned about the US economic situation, and hopes the US stimulus policy could make effective progress," said Zhu.

Zhu said China wants to see more stable US financial market, declining fiscal deficit of US government and improvement of balance sheet of Federal Reserve Bank.

China, with the world's largest foreign exchange reserves of $2.13 trillion, bought $38 billion worth of the bills in May, bringing the total holding to $801.5 billion, according to the US Treasury Department's website last week.

China will make investment decisions in line with three principles of investing on US treasury bills: safety, liquidity and profitability, said Zhu.

When Geithner visited China in June, he said that China's US dollar assets are safe.

Trade and investment will be high on agenda of the dialogue.

"China hopes the dialogue could further the negotiation of a bilateral agreement on investment protection, which is still under way," said Zhu.

Launched at the fourth China-US Strategic Economic Dialogue in 2008, the agreement negotiation had drawn great attention of the two governments, Zhu said, adding achievements had been made in appraising each other's relevant documents raised by the two sides.

As for the trade friction emerging in bilateral trade, Zhu said China holds a very clear stance on this issue.

"Firstly, China hopes trade problems and conflicts could be resolved through communication and friendly negotiation."

If such problems are hard to deal with on a bilateral basis for the time being, we could appeal to the World Trade Organization (WTO) in accordance with the WTO principles and due procedures, he said.

The trade problems were brought about by the rapid development of the bilateral economic ties, which China is committed to push forward, Zhu said, noting just in spirit of developing the ties, the two leaders decided to establish the mechanism of bilateral strategic and economic dialogue.

Other topics to be discussed at the economic dialogue include Sino-US cooperation on major economic issues, how to weather the financial crisis and achieve economic recovery, sustainable economic growth and balanced growth, building a strong financial system and, trade and investment.

The two countries will also discuss bilateral relations, international and regional issues, and global issues at the first China-US strategic and economic dialogue, said Chinese Vice Foreign Minister He Yafei.

"China hopes the strategic dialogue will help the two countries expand consensus, narrow down differences, deepen mutual trust and boost cooperation," said He.

US President Barack Obama will address the opening session of the dialogue, and meet with the Chinese delegation after the dialogue, He said.

"It's imperative for the two countries to hold the strategic and economic dialogues under current circumstances and exchange views on some strategic, long-term and global issues," said He.