Clinton to reassure Asia on US debt

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Clinton to reassure Asia on US debt

HONG KONG - U.S. Secretary of State Hillary Clinton sought to reassure Asian investors over U.S. debt worries on Monday, saying she was confident President Barack Obama would ultimately reach a deal with congressional leaders to prevent a catastrophic default.

By Andrew Quinn And Farah Master (Reuters)

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Published: Mon 25 Jul 2011, 11:25 AM

Last updated: Tue 7 Apr 2015, 3:22 AM

“I’m confident that Congress will do the right thing and secure a deal on the debt ceiling, and work with President Obama to take the steps necessary to improve our long-term fiscal outlook,” Clinton said in a speech to business leaders in Hong Kong.

Clinton’s speech was overshadowed by Washington’s failure thus far to craft a deal to extend the U.S. government’s borrowing authority, but she said the political wrangling over spending was both natural and healthy.

“Let me assure you we understand the stakes. We know how important this is for us and how important it is for you,” Clinton said.

U.S. lawmakers failed to achieve a budget breakthrough on Sunday, with scant sign of a possible deal to raise the government’s debt ceiling and head off a default in nine days that could trigger global economic calamity and downgrade America’s triple-A credit rating.

After weeks of rancorous talks, both sides appeared further apart than ever on a deficit reduction deal that would clear the way for Congress to raise the $14.3 trillion debt ceiling.

FREE AND FAIR

Clinton laid out the U.S. vision for the future of world trade, one she said must be based on “open, free, transparent and fair” principles that apply to all.

“We in the United States are in the middle of a necessary transition. We must save more and spend less...we must borrow less as well,” Clinton said. “Our partners must meet this change with changes of their own.”

Despite the problems, Clinton said the United States was committed to expanding its economic outreach — and to push for a “level playing field” to counter what Washington believes are unfair advantages that have helped China and some other emerging economies grow so fast.

She urged Asian governments to do more to boost local consumer demand, and to take a new look at policies ranging from intellectual property rights to support for state enterprises at the expense of private entrepreneurs.

Clinton’s speech did not directly target China, but her message was clearly intended for Beijing, which U.S. officials have accused of using regulatory measures and an artificially low exchange rate to rack up some $3.2 trillion in foreign exchange reserves.

U.S. officials said China was clearly concerned about the U.S. debt impasse and had repeatedly urged Washington to get its economic house in order.

“They’ve basically said that they’ve made a substantial investment in the United States and that they expect — not hope, expect — the United States will abide by its various financial and international commitments. Full stop,” one U.S. official said.

Clinton, the first U.S. Secretary of State to visit Hong Kong since Beijing resumed control over the city from Britain in 1997, comes at the end of a round-the-world trip during which China was often at the top of the agenda.

She urged leaders in India and Indonesia—which Washington sees as potential counterweights to Beijing — to take a more assertive regional stance and urged China and its Southeast Asian neighbors to quickly resolve territorial disputes over the South China Sea and press North Korea to get serious about discussing its nuclear program.

Clinton will head to the southern Chinese economic boomtown of Shenzhen on Monday for a meeting with Chinese State Councilor Dai Bingguo that is expected to touch on a number of these issues. Despite their differences, both Washington and Beijing have signaled they want to keep ties on track ahead of a series of major international meetings including the East Asia Summit in November.



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