Budget deficit to fall, U.S. assures China

From Seattletimes.nwsource.com

Top Obama administration officials sought to reassure their Chinese counterparts that the U.S. was committed to reducing its ballooning deficit and sought assurances from China that it would retool its economy to be less dependent on exports.

Speaking at the start of the U.S.-China Strategic and Economic Dialogue here, President Obama said Monday that the two countries had a "mutual interest in a lasting economic recovery" and that their partnership was "as important as any bilateral relationship in the world."

"The current crisis has made it clear that the choices made within our borders reverberate across the global economy — and this is true not just of New York and Seattle, but Shanghai and Shenzhen as well," Obama said.

"And that is the example we have set by acting aggressively to restore growth, prevent a deeper recession and save jobs for our people," he said.

But those actions have fueled concerns in China about the value of its large holdings in U.S. bonds, which would be eroded by increased inflation caused by large budget deficits.

Chinese officials had "serious questions" Monday about Obama-administration plans for pulling back its economic stimulus and financial rescue programs, said David Loevinger, the Treasury Department's senior coordinator for China affairs and the summit.