US Treasury Secretary Timothy Geithner told future Chinese leaders that the Obama Administration will cut its budget deficit once it is sure the economy is safely growing.
In a speech to about 30 middle-aged cadres at the Central Party School, Geithner said Washington is aiming to steadily lower its deficit as a percentage of national output.
“The basic strategy is to make sure that our economy is growing, then institute long-term reforms, and restore the basic discipline to the budget process that we abandoned in the previous decade,” Geithner said.
China, which holds some $895bn of US treasury debt, has previously expressed concern over the size of US deficits and the safety of Chinese investments.
Geithner, who heads for London after the conclusion of a two-day Strategic and Economic Dialogue with China, said leaders there were also coming to grips with their fiscal woes.
He expressed confidence that Europe would find a way to meet “the difficult challenge of trying to restore sustainability” to a budgeting process that was no longer working.
He suggested that the EU had set out a budget restraint program that failed to include a mechanism for dealing with imbalances between member countries.
“Europe's leaders recognise that and now are acting forcefully to put strong reforms in place,” he said.
Geithner was at pains throughout the China visit to try to assure Chinese officials that budget discipline was coming back to the US.
“We went through a period in the US when it was popular to think that deficits don't matter,” he said.
“Nobody thinks that today.”
Both China and the US share a responsibility to work toward balanced growth that will benefit the global economy, he said, adding that the US would hew to a line of stricter deficit control.
“We are committed to make sure that we will be a source of stability and growth in the future,” Geithner told the assembled students.