China, Debt and Economic Policy

By June 1, 2009Economy, Trade

Politico, “Barack Obama’s China plan looks like George W. Bush’s.” The story delivers what the headline promises.

Frank Vargo, the NAM’s vice president for international economic affairs, commented on the context of Treasury Secretary Geithner’s trip given the current state of play:

Now more than ever, the two economies need each other,” said one observer from the business community. “The administration recognizes they need to maintain the right posture.”

And with markets already skittish, signs of significant tension between the two countries would have dire consequences for the global economy, said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.

“Everybody’s looking at United States and China as really being the two principal players on the global economic scene. So if they start shouting at each other, this is bad for financial markets right now,” he said. “You’ve just got to be careful. It doesn’t mean you change your objectives.”

And from an earlier AP story, “Geithner wields little leverage in China talks“:

Frank Vargo, vice president for international affairs at the National Association of Manufacturers, said he understood the change in tone.

“They talked a tougher line during the campaign, but the world changed,” Vargo said. “It is a much more delicate time now.”

If nothing else, the U.S. and China could walk away with a proclamation that they have shown global financial markets that the two powerful economies are pursuing common goals to fight the global downturn.

“We are China’s biggest customer, and they are buying our debt; it is definitely a mutual relationship,” Vargo said. “I think the new administration wants to stress that it is willing to work in a cooperative manner, but the underlying problems will still be there.”


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