This is scary news. Chinese Premier Wen Jiabao said today he is
"worried" about China's large investment in U.S. Treasury bonds and
will begin a policy of diversification when it comes to future Chinese
investment.
"We
have lent a huge amount of money to the U.S. Of course we are concerned
about the safety of our assets. To be honest, I am definitely a little
worried," Wen said.
At a number of diplomatic meetings since then, Chinese officials have raised the issue of U.S. Treasuries and have sought assurances the United States that it will do everything possible to maintain the stability of its economy. On Friday, Wen called on the Obama administration to "maintain its good credit, to honor its promises and to guarantee the safety of China's assets." (Link)
It's hard to say how serious this is. At the same time Premier Wen admitted he was worried, he also acknowledged he believes the Chinese investments are safe. It's also true that Chinese investment has continued unabated throughout the economic meltdown here in the U.S.
But Chinese nervousness with the value of the dollar has been known for some time and the White House responded quickly. Press Secretary Robert Gibbs noted today that American investment is the safest in the world and took the opportunity to push for Congressional approval of the new budget that ispromised to halve the deficit by 2012.
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