With China anxious over the financial well-being of the United States -- not to mention its holdings of an estimated $1.16 trillion in U.S. Treasury bonds -- a fresh face has arrived in Beijing to try to smooth things over.
The new U.S. ambassador to China, Gary Locke, is the first Chinese-American to hold the post. Formerly Secretary of Commerce under President Barack Obama, he takes over from Jon Huntsman in a position which grants minor celebrity status in Beijing.
A photo of Mr. Locke buying coffee at the Starbucks in Seattle airport -- while carrying a backpack and attempting to use a coupon -- went viral on Chinese Web portals last week, viewers flippantly astounded that he would do such things in the same manner as other mere mortals.
In his first appearance before Chinese media on Sunday, Mr. Locke went to great lengths to reassure his new hosts of his country’s intentions. World financial markets have struggled and the U.S. dollar has weakened, triggering fears of a double-dip recession, since ratings agency Standard & Poor’s downgraded the U.S. credit rating earlier this month.
"The president and Congress have joined on a path ensuring the fiscal integrity of the United States of America," Mr. Locke said. "Over the last several days more people are buying U.S. Treasuries and that's a clear indication that investment in the U.S. is safe and secure and that the economy, while having its challenges, is still strong."
China is facing its own worries at home, with inflation rising even as a global slowdown threatens. Though the People’s Bank of China on Friday pledged it would continue using tools including interest rate hikes to rein in the inflation that hit 6.5 per cent in July, officials have thus far held off on a widely expected rate hike.
Instead, the central bank has allowed the yuan to strengthen against the U.S. dollar, on Monday setting the central parity rate to 6.3950 -- a new high for a fourth straight trading day. The yuan traded at 6.3904 late Monday, weakening from Friday’s record 6.3895.
Chinese authorities are likely to hear more encouragement toward a freer-floating yuan from Mr. Locke, who said ahead of his formal appointment that he would look for more movement on currency.
“We are seeing movement on the currency,” he told a U.S. Senate Foreign Relations Committee in May. “We believe it should float more and faster.”