Standard & Poor's and the Tea Party might have lost faith in the U.S. economy, but China hasn't. During the opening remarks at a roundtable discussion with vice president Joe Biden and Chinese political leaders on Friday, China's vice-president Xi Jinping said his country thinks the U.S. will still come out on top, despite ongoing fiscal problems and weak economic fundamentals.
"We believe the U.S. is highly resilient, and has a strong capacity to repair itself," Xi told Xinhua news reporters. "We believe that the U.S. economy will achieve even better development as it rises to its challenges."
Xi is expected to become the new president of China in March 2013.
China is the largest foreign holder of U.S. debt, accounting for roughly 10% of the more than $14.3 trillion in outstanding government issues. So the world's No. 2 economy pays careful attention to U.S. fiscal balances. However, despite the fact that China's most recent purchases of U.S. government bonds are yielding below 3%, there are very few fixed income markets in the world where China could park a few hundred billion dollars.
During the meet, Biden reportedly said the U.S. was interested in seeing Chinese direct investment in American businesses. Xinhua also reported of a possible $1 billion's worth of commercial deals between companies in the two countries. No details were available by press time.
President Hu Jintao and Premier Wen Jiabao both met with Biden, who arrived in China on Wednesday. Hu said China will push for mutually beneficial economic cooperation with the U.S. to enhance market confidence and stabilize the international financial system. Wen mimicked the vice president when he reportedly said that he, too, was "fully confident" that the U.S. could overcome economic hardship and return to growth. Wen noted the U.S. economy's force as a center of global innovation, high-quality business talent and strong economic and financial institutions.
Biden flies to southwest China's Sichuan province on Saturday, where he will deliver a speech at Sichuan University.
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