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China Warns Us Of "dollar Flood". The Words

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http://moneynews.newsmax.com/markets/china.../28/240963.html

China Warns U.S. Against Flood of Dollars

Tuesday, July 28, 2009 2:29 PM

WASHINGTON -- A top Chinese official said on Tuesday the United States should be careful about flooding global markets with dollars while the world struggles to restore economic stability and get growth back on track.

Sitting beside U.S. Treasury Secretary Timothy Geithner, Chinese Vice Premier Wang Qishan made clear at the start of the concluding day of the "Strategic and Economic Dialogue" that China has concerns about its U.S. investments.

"As a major reserve currency-issuing country in the world, the United States should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole," Wang said.

China is the United States' biggest creditor, holding $802 billion of U.S. Treasury securities on May 31, and Washington needs Beijing to keep buying its debt to finance a budget deficit estimated to hit $1.8 trillion this year.

The talks are about more than just economics, with U.S. Secretary of State Hillary Clinton co-chairing the U.S. side and seeking Beijing's cooperation on a wide range of sensitive foreign policy and diplomatic issues from North Korea and climate change to infectious diseases and energy markets.

NORTH KOREA A WORRY

Clinton separately hosted senior Chinese officials at the State Department on Tuesday.

"We were very pleased by our discussions yesterday which were thorough, comprehensive, very open and candid and extremely useful," Clinton said at the start of the meeting.

In particular, Washington wants greater support from veto-wielding U.N. Security Council member China on controlling both North Korea and Iran's nuclear programs.

Both sides were wielding a carrot-and-stick approach in their public comments, with Geithner saying he would back a bigger role for China in governing the International Monetary Fund and World Bank but still committed to persuading China to back off its reliance on exporting to U.S. markets.

Wang responded that China, now the world's No. 3 economy with huge reserves of foreign currency, is ready to spur more domestic demand but he specified that he wanted the United States to allow more exports of high-technology goods to China.

"While ensuring economic growth, the Chinese government will focus on boosting domestic demand, and in particular consumer demand, focus on deepening reform and opening up advanced economic restructuring and improving people's livelihood," Wang pledged.

SENSITIVE RELATIONSHIP

The stakes are high for both countries in managing economic and diplomatic relations smoothly, as President Barack Obama noted on Monday at the start of the once-a-year sessions.

"The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world," he said. "That reality must underpin our partnership."

Beijing needs access to America's consumer markets, while Washington is dependent upon China continuing to help finance the shortfall between the government's spending and its income and both need to boost job-creating economic growth.

Geithner, just six months into his job as U.S. treasury chief, already has visited Beijing to try to reassure it that its dollar-denominated U.S. investments will keep their value and that U.S. deficit will be brought down.

The veteran Wang said on Tuesday that Beijing will help to ensure a recovery from the past two years of financial crisis, which he said seemed to be largely over, but pointed to concessions that China wants.

"We will work to increase our imports from the United States," Wand said, adding: "We hope the U.S. will relax its controls and restrictions on exports to China of its high-tech technologies."

Edited by AvidFan

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"Much is said about the United States dollar and how "it" is responsible for excessive global credit expansion and a variety of imbalances from China to Zimbabwe. The simple truth of the matter is that the problem is simply excessive expansion of credit. It makes no difference whther credit is denominated in dollars or rupees. If you have too much of it you are going to have problems that are too myriad to list. What the global economy needs to come to grips with is the fact that too many nations are living too high on the hog and are not paying their way in terms of production. The United States is the world's number one consumer but they are also the world's number one in terms of production as measured by GDP. If there is a problem with this it is in the minds of those who seek to blame the United States and its demand for goods on everyone else."

I am afraid I have to agree.

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"Much is said about the United States dollar and how "it" is responsible for excessive global credit expansion and a variety of imbalances from China to Zimbabwe. The simple truth of the matter is that the problem is simply excessive expansion of credit. It makes no difference whther credit is denominated in dollars or rupees. If you have too much of it you are going to have problems that are too myriad to list. What the global economy needs to come to grips with is the fact that too many nations are living too high on the hog and are not paying their way in terms of production. The United States is the world's number one consumer but they are also the world's number one in terms of production as measured by GDP. If there is a problem with this it is in the minds of those who seek to blame the United States and its demand for goods on everyone else."

I am afraid I have to agree.

the blame is with the monetary system built on a foundation of paper, lies and spin

there is only one way to sort it out

but the bankers and the politicians dont like it as they have reduced power

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