China Warns USA on Soaring Deficits

WASHINGTON (AP) - The United States and China are striking a conciliatory tone in their public comments during economic talks, although that hasn't stopped China from posing some pointed questions behind closed doors about such issues as America's soaring budget deficit.

The Obama administration has questions it wants answered as well in such areas as China's long reliance on massive trade surpluses with the United States to bolster its domestic economy.

Both sides are expected to wrap up two days of high-level talks Tuesday with a joint communique that will lay out a work plan that both sides will tackle in upcoming meetings.

Officials from both nations played down the prospects for any breakthroughs this week on the major issues that separate the two nations, including America's massive trade deficit with China. Critics have blamed the trade deficit over the years for the loss of millions of U.S. manufacturing jobs.

President Barack Obama opened Monday's discussions by declaring that the United States sought a new era of "cooperation, not confrontation" with China and that management of the U.S.-China relationship would be a major factor in defining the history of the 21st century.

Obama dispatched his top economic officials - Treasury Secretary Timothy Geithner, National Economic Council Director Lawrence Summers, White House budget director Peter Orszag and Federal Reserve Chairman Ben Bernanke - to try to reassure China that the U.S. will not let deficits or inflation jeopardize the value of Chinese investments...

The Chinese, who have the largest foreign holdings of U.S. Treasury debt at $801.5 billion, have been expressing worries that soaring deficits could spark inflation or a sudden drop in the value of the dollar, thus jeopardizing their investments. Chinese officials said those concerns were raised during Monday's talks.

Read it at AP
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