While Barack Obama was dealing with the bankruptcy of GM yesterday, U.S. Treasury Secretary Tim Geithner was in Beijing, dealing with what may be even bigger issues for the USA.
China is now the biggest holder of U.S. government debt. When the U.S. spends money on GM or Iraq or stimulus at home, that is — in a very real sense — China’s money.
Geithner was there to make sure Chinese leaders believe the U.S. is good for it. A new poll, out while he was there, found 87 percent of Chinese respondents believe it is not.
This hour, On Point: Soothing America’s banker — China.
Joining us from Beijing is James Fallows, national correspondent and widely read blogger for The Atlantic. He’s been based in China since 2006, and his latest book, “Postcards from Tomorrow Square,” collects his articles for the magazine during that time. His piece “Be Nice to the Countries That Lend You Money,” an interview with the president of China Investment Corporation, appeared in the December 2008 issue.
In our studio we’re joined by Li Jin, professor of finance at Harvard Business School. He has taught at Fudan University in Shanghai and served as a consultant for Shanghai International Securities Co. Ltd.
And from New York we’re joined by Brad Setser, economist and fellow at the Council on Foreign Relations. He has worked at the U.S. Treasury Department and the International Monetary Fund. You can read his latest thoughts at his blog, Follow the Money.