US Vice President Biden reassures China on US economy

Updated On: Aug 22, 2011

US Vice President Joe Biden has reassured China that the United States will never default on its debt, expressing faith in the strength of the US economy.

Speaking at the end of his six-day tour of China, Biden pointed out that US citizens still hold the vast majority of the US debt.

"So our interest is not just to protect Chinese investment. We have an overarching interest in protecting the investment, while the US has never defaulted and never will default," he told the audience at Sichuan University.

He urged China to continue investing in US Treasury bonds.

"Not to worry," Mr. Biden said, "we are still the single best bet in the world in terms of where to invest."

"You're safe."

Mr. Biden promised that the US was taking steps to cut budget deficits and must control the growth of entitlements, such as medical care.

During his speech, Mr. Biden also spoke highly of China's economic and social progress, stressing that a rising China is a positive development, not only for the Chinese people but for both the US and the world.

"A more prosperous China will mean more demand for American-made goods and services," Mr. Biden said. "We have a stake in one another's success.

"The more we can work together, the more our people will benefit ... the more the world will benefit as the consequence of our cooperation," he said.

He added that China's rising will bring the US a new partner with whom they can deal with the same global threats together and share many of the same strategic objectives and responsibilities.

He noted that Chinese and US prosperity is key to reviving the global economy and no serious problems can be resolved without Beijing and Washington at the table.

Report & Analysis: Biden gives assurances on debt [China Daily, 22 Aug 2011]
Report & Analysis: In China, VP Biden promises US assets are "safe" [CBS News, 22 Aug 2011]

But in response, China's official Xinhua news agency called Mr. Biden's reassurances “far from enough” to soothe concerns in China and other major markets. Xinhua's commentary called for concrete U.S. actions, and said Washington must “realize that confidence can not be established through mere rhetoric.”

The commentary also linked the debt issue to bilateral disputes over questions such as market access, human rights and China's sovereignty concerns over Taiwan and Tibet.

China holds about $1 trillion of U.S. debt, making it the biggest foreign creditor of the United States. It has expressed concern that the deal to raise the U.S. debt ceiling, barely avoiding default, does not do enough to cut the budget deficit.

Report: Biden Wraps Up China Visit, Heads for Mongolia [Voice of America, 21 Aug 2011]

Mr. Biden's visit to China was also significant because it gave a glimpse of how the next generation of China's leaders may differ from the current one after the leadership transition next year.

Vice President Xi Jinping, expected to be the next party chief and Chinese President, met several times with his visiting US counterpart. The two shared tea as well as an informal dinner in a restaurant in the western city of Chengdu on Sunday.

Mr. Xi's performance was of particular interest to U.S. officials, as he had never spent so much time with a senior U.S. figure as he did with Mr. Biden, and isn't due to make his first official trip to the U.S. until next year.

Commentators say the contact between the two men hinted at a slightly more open and worldly leadership style from Mr. Xi. According to reports, Mr. Xi demonstrated an acute interest in US politics and negotiations over raising the government debt limit. US officials say they believe that Mr. Xi, whose daughter is studying at Harvard University, is committed to maintaining good relations with the US.

Analysis: China Previews Rising Leadership [Wall Street Journal, 22 Aug 2011]

Mr. Biden will visit Mongolia's capital Ulaanbaatar on Monday, after wrapping up his visit to China.

During the short stop in Mongolia, Mr. Biden is expected to demonstrate US support for democratic development in the central Asian country and praise growing diplomatic ties between the United States and Mongolia.

Japan is the third stop on Biden's Asian tour. He is scheduled to leave for Tokyo later on Monday. A White House statement issued ahead of his trip says Mr. Biden will “express steadfast U.S. support for its close ally in the wake of the recent earthquake, tsunami, and nuclear emergency".

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