Chinese prime minister Wen Jiabao spoke to CNN’s Fareed Zakaria while he was in New York for the UN General Assembly last week. He very rarely gives interviews, and this was possibly his most open interview ever.
From a financial-markets point of view, the interview is very good news. Wen made it very clear that China is willing and able to help get through this present crisis — something which is absolutely necessary, given its enormous stock of US debt. A couple of excerpts:
ZAKARIA: What do you think of the current financial crisis affecting the United States?
WEN: This time, we should join hands and meet the crisis together. If the financial and economic systems in the United States go wrong, then the impact will be felt not only in this country, but also in China, in Asia and in the world at large.
I have noted the host of policies and measures adopted by the U.S. government to prevent an isolated crisis from becoming a systematic one. And I hope that measures and steps that they have adopted will pay off.
ZAKARIA: There is another sense in which we are interdependent. China is the largest holder of U.S. Treasury bills. By some accounts, you hold almost $1 trillion of it. It makes Americans – some Americans – uneasy. Can you reassure them that China would never use this status as a weapon in some form?
WEN: Something has gone wrong in the virtual economy. But if this problem is properly addressed, then it is still possible to stabilize the economy in this country.
Of course, we are concerned about the safety and security of Chinese money here. But we believe that the United States is a credible country, and particularly at such difficult times, China has reached out to the United States.
And actually, we believe such a helping hand will help stabilize the entire global economy and finance, and to prevent major chaos from occurring in the global economic and financial system. I believe now, cooperation is everything.
So there you have it: the US and China are allies in the Global War on Systemic Risk. Although I’m not sure you’d find many Americans willing to agree that the present crisis is an "isolated" one.