Biden tells China: US will never default on debt

US Vice President Joe Biden gestures after speaking to students at Sichuan University in Chengdu © AFP Peter Parks

AFP

CHENGDU, China (AFP) – US Vice President Joe Biden said Sunday that the world’s biggest economy would never default on its debts, during a visit aimed at boosting Chinese confidence in America’s beleaguered finances.

In a speech to hundreds of university students in the vast southwestern city of Chengdu, Biden also urged China to “cherish” a free flow of information between the government and public, as the communist state quells dissent anew.

Biden said at Sichuan University that the United States remained the “single best bet” for investment — despite the historic downgrade this month of the country’s top-notch credit rating by Standard & Poor’s.

“The United States has never defaulted and never will,” he said, on the final day of his first official visit to China as vice president.

China is the largest foreign holder of US debt, and Biden has used the five-day trip to assure its leaders that their massive investment remains safe after Washington narrowly avoided a catastrophic default earlier this month.

Chinese leaders including Premier Wen Jiabao and Vice President Xi Jinping have been conciliatory in their public appearances with Biden.

In sharp contrast, China’s state media has accused US leaders of acting recklessly during a political impasse between the White House and Republicans over allowing the country’s debt ceiling to rise.

The official Xinhua news agency — which has published a number of blistering commentaries in recent weeks — said Sunday “concrete actions are badly needed” by the United States to turn promises “into reality”.

“It must end its excessive reliance on overseas borrowing, make substantial reforms and cuts to its bloated entitlement programs, reduce budget deficits and restructure its economy,” Xinhua said.

China has used the proceeds of its thriving export machine to invest around $1.2 trillion in US Treasury bonds, and the world’s second-largest economy has appealed for global financial stability as panic again grips markets.

China’s share of the US debt © AFP/Graphic

On Friday, Wen expressed confidence in the US economy and said Biden had “sent a very clear message to the Chinese public that the United States will keep its word and obligations with regard to its government debt”.

“In spite of the difficulties facing the US economy at present, I have full confidence that the United States will overcome these difficulties and get its economy back on the track of healthy growth,” Wen told Biden.

Biden’s visit has been aimed partly at building ties with his counterpart Xi, who is slated to be anointed as China’s top leader next year but remains virtually unknown in US policy circles.

In Chengdu, Biden met Xi again and witnessed reconstruction efforts following the 2008 Sichuan earthquake, which left over 87,000 people dead or missing.

During his speech, Biden told his audience that “China should cherish an exchange between its citizens and students and their government,” noting that “greater openness is a source of stability and a sign of strength”.

“Prosperity peaks when governments foster both free enterprise and free exchange of ideas,” he said. “Liberty unlocks a people’s full potential and in its absence, unrest festers.”

Biden raised human rights concerns during his meetings with Chinese leaders last week, US officials have said, but they refused to go into details of whether any individual cases were brought up.

Washington last week appealed to Beijing to free prominent rights lawyer Gao Zhisheng, who has not been heard of since last year.

But police have stepped up surveillance on dissidents and warned them against making any high-profile protests or attempting to meet Biden during his visit, activists said.

Chengdu, a huge conurbation of 14 million people, is the capital of Sichuan province, where nearly 200 of the Fortune 500 largest firms in the world have invested.

China and the United States have signed deals worth nearly $1 billion during Biden’s trip, according to a US official who requested anonymity.

Following his stopover in Chengdu, Biden will visit Mongolia and close US ally Japan.

© AFP — Published at Activist Post with license