U.S. Treasury Secretary Tim Geithner (in his first official visit to China) reaffirmed on Monday his faith in a strong U.S. currency and reassured the Chinese government that China’s massive holdings of dollar assets would not be unduly damaged by the economic crisis.
“Chinese assets are very safe,” Geithner said in response to a question after a speech at Peking University.
The comment, according to Telegraph, provoked loud laughter from the audience of students.
There are growing fears over the size and sustainability of the US budget deficit, which is set to rise to almost 13% of output this year as the world’s biggest economy fights contraction. Beijing has expressed concern about the strength of the greenback and the value of their investments.