Do you remember how Obama was going to improve the United States’s image in the world? Well, he may or he may not (in a planet that is, and always wilI be, Hobbesian, I know what I’d guess, but it’s early days, I suppose), but as we wait to see how he does, it’s worth remembering that his domestic spending program is having international consequences . . .
In his first official visit to China since becoming Treasury Secretary, Mr Geithner told politicians and academics in Beijing that he still supports a strong US dollar, and insisted that the trillions of dollars of Chinese investments would not be unduly damaged by the economic crisis. Speaking at Peking University, Mr Geithner said: “Chinese assets are very safe.”
The comment provoked loud laughter from the audience of students. There are growing fears over the size and sustainability of the US budget deficit, which is set to rise to almost 13pc of GDP this year as the world’s biggest economy fights off recession. The US is reliant on China to buy many of the government bonds it is planning to issue but Beijing’s policymakers have expressed concern about the strength of the dollar and the value of their investments.
Lest there be any doubt, those Chinese students are laughing “at” not “with.”