US President Barack Obama’s aides scrambled on Friday to assure China that its hundreds of billions of dollars in US bonds were safe, after Premier Wen Jiabao (溫家寶) expressed concerns about “the safety” of its investments.
“There’s no safer investment in the world than in the United States,” said White House spokesman Robert Gibbs, underlining Obama’s bid to strive for “fiscal sustainability” and slash the ballooning budget deficit.
White House National Economic Council Director Lawrence Summers echoed Obama’s “commitment” that the US would “be sound stewards of the money we invest.”
China held US$727.4 billion in US Treasury bonds at the end of last year, just ahead of Japan, the holder of US$626 billion in bonds, US government data showed.
In a rare expression of concern over Beijing’s mega bond investments, Wen called on US economic planners to safeguard Chinese assets.
“We have lent huge amounts of money to the United States. Of course we are concerned about the safety of our assets,” Wen told reporters in Beijing. “To be honest, I am a little bit worried and I would like to ... call on the United States to honor its word and remain a credible nation and ensure the safety of Chinese assets.”
As the largest creditor to the US, China is “extremely interested in developments in the US economy,” he said.
Analysts say a loss of confidence in US Treasury securities could cause a dramatic drop in the dollar and force Washington to pay higher interest rates.
Scott Brown, chief economist at Raymond James & Associates, said that any Chinese effort to sharply reduce US Treasury holdings would only hurt Beijing.
“There is no incentive for the Chinese to dump their Treasuries,” Brown said.
Most of China’s foreign exchange reserves, which reached US$1.95 trillion by the end of last year, is believed to be held in the greenback.
Summers, reacting to the Chinese premier’s concern at a forum at the Brookings Institution in Washington, cited the prolonged recession in the US and said all resources available had to be utilized to stimulate economic growth.
While the US had to borrow at an “admirably high scale” now to make up for the loss of revenue caused by the recession, “it does mean that your debts can’t be rising relative to your incomes” when the economy begins to expand, he said.
Gibbs said US leaders could give “further reassurance” on foreign investments by demonstrating “their commitment to spending money wisely.”
They could also display a resolve “to stop borrowing more of it in the future by putting us on that path to fiscal sustainability through passage of the president’s budget to cut the deficit in half.”
Obama rolled out an audacious US$3.55 trillion budget proposal last month that bristles with economic reforms and spending on healthcare, climate change and education.
The budget forecasts a US$1.750 trillion deficit in this fiscal year, but foresees that figure falling to US$1.171 trillion next year.
Taiwan’s technology protection rules prohibits Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) from producing 2-nanometer chips abroad, so the company must keep its most cutting-edge technology at home, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. Kuo made the remarks in response to concerns that TSMC might be forced to produce advanced 2-nanometer chips at its fabs in Arizona ahead of schedule after former US president Donald Trump was re-elected as the next US president on Tuesday. “Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently,” Kuo said at a meeting of the legislature’s
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS