BEIJING - U.S. Treasury Secretary Timothy Geithner sought to assure China, America's biggest creditor, that the Obama administration is committed to attacking soaring budget deficits.
"As we recover from this unprecedented crisis, we will cut our fiscal deficit, we will eliminate the extraordinary government support that we have put in place to overcome the crisis," Geithner said in a speech to students at the university.
The speech was the first stop on a two-day trip to China - Geithner's first as Treasury secretary - and the students let the Obama administration's chief economic spokesman know through a series of tough questions that they wanted an accounting of the money that China has invested in Treasury notes and bonds.
China is the largest holder of Treasury securities, the result of the billions of dollars that have flown into the hands of Chinese companies because of more than a decade of record trade surpluses with the United States.
Responding to one question, Geithner said, "Chinese financial assets are safe. We have the deepest, most liquid financial markets in the world." Later in the day, Geithner and other Treasury officials met at the Great Hall of the People with a team of economic officials from China led by Vice Premier Wang Qishan for discussions about the upcoming talks scheduled for this summer in Washington.
At the start of the session, Geithner said, "The world has a huge stake in our two countries working closely together to lay a foundation for recovery."
The Treasury announced that Geithner was appointing David Loevinger to be the department's coordinator for the high-level talks and naming David Dollar to be Treasury's representative in China. In his economic speech, Geithner said that a successful transition to a more balanced and stable global economy will require substantial changes to economic policy and financial regulation around the world and especially in the world's largest and third largest economies.
"How successful we are in Washington and Beijing will be critically important to the economic fortunes of the rest of the world," Geithner said in his university speech. Geithner had extensive praise for the economic transformation China has achieved and avoided emphasizing past trade disputes, such as the campaign waged by the Bush administration to force China to move faster to allow its currency to gain.