Geithner offers China vow of greater fiscal discipline

By Glenn Somerville

BEIJING, May 25 (BestGrowthStock) – U.S. 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 $895 billion of U.S. treasury debt,
has previously expressed concern over the size of U.S. 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 European Union had set out a budget
restraint program that failed to include a mechanism for dealing
with imbalances between member countries.

“Europe’s leaders recognize that and now are acting
forcefully to put strong reforms in place,” he said.

Geither meets new British finance minister George Osborne
before travelling to Frankfurt for meetings with European Central
Bank President Jean-Claude Trichet and to Berlin for a Thursday
meeting with German Finance Minister Wolfgang Schaeuble.

Geithner was at pains throughout the China visit to try to
assure Chinese officials that budget discipline was coming back
to the United States.

“We went through a period in the United States when it was
popular to think that deficits don’t matter,” he said.

“Nobody thinks that today.”

Both China and the United States share a responsibility to
work toward balanced growth that will benefit the global economy,
he said, adding that the United States 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.

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(Reporting by Lucy Hornby; Editing by Ken Wills)

Geithner offers China vow of greater fiscal discipline