China has made a "wise" choice by buying United States debt instruments, U.S. Secretary of State Hillary Clinton said on Tuesday in Beijing, where senior officials from both powers are meeting for two days of talks. In an interview with Chinese television, Clinton also said that at some point China would have to invest more at home.If Hillary represented the (rather odd) carrot, it seems Treasury Secretary Tim Geithner is still wielding the stick. In a not-so-subtle hint, he warns that the delayed report on currency practices of US trading partbners will be released in due course:
China is the world's largest holder of U.S. Treasuries, with $895.2 billion and added to its stockpile in March for the first time in seven months. Chinese officials, including Premier Wen Jiabao, last year prodded the Obama administration to avoid pursuing fiscal policies that could erode the value of those treasury holdings.
U.S. Treasury Secretary Timothy Geithner declined on Tuesday to say when his department would issue its delayed report on the currency practices of China and other major trading partners. That time will come," Geithner said at a press conference at the conclusion of high-level foreign policy and economic talks in Beijing.
In mid-April, Geithner delayed the report, which must declare whether China manipulates its currency. If found to be a manipulator, that would trigger increased pressure on Beijing to let the yuan rise, after having effectively pegged it to the dollar for the past 22 months.