Cable que recoge las primeras amenazas en lo relativo a la compra de bonos si EE UU vende armas a Taiw¨¢n
Un alto cargo chino explica que la venta de armas estadounidenses a Taiw¨¢n dificultar¨ªa que la opini¨®n p¨²blica china entendiera el apoyo financiero a EE UU
| ID: | 173540 |
| Date: | 2008-10-14 00:44:00 |
| Origin: | 08BEIJING3899 |
| Source: | Embassy Beijing |
| Classification: | UNCLASSIFIED |
| Dunno: | 08BEIJING3888 |
| Destination: | VZCZCXRO4713 PP RUEHCN RUEHGH RUEHVC DE RUEHBJ #3899 2880044 ZNR UUUUU ZZH P 140044Z OCT 08 FM AMEMBASSY BEIJING TO RUEHC/SECSTATE WASHDC PRIORITY 0409 RUEATRS/DEPT OF TREASURY WASHDC INFO RUEHOO/CHINA POSTS COLLECTIVE RHEHNSC/NSC ASHDC |
UNCLAS BEIJING 003899 SIPDIS ENSITIVE FOR EAP/CM PAMELA PARK TREASURY FR OASIA/WINSHIP E.O. 12958: N/A TAGS: ECON, EFIN, CH SUBJECT: China's SAFE Cautious about U.S. Lending Ref: Beijing 03888 THIS CABLE IS SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET DISTRIBUTION. 1. (SBU) Summary. State Administration of Foreign Exchange (SAFE) Deputy Director General Liu Jiahua on October 9 said his agency remained very concerned about counterparty risk in repo market lending to U.S. financial institutions. While SAFE's policy towards U.S. Government-supported Enterprise (GSE) debt has not changed and the amount of debt purchased has not decreased, portfolio managers had shifted toward shorter- term debt. Liu also said SAFE now was focusing more on sovereign risk among developed countries, in part due to concern that the large amount of debt guaranteed by the U.S. and European governments could impact their fiscal budgets and their ability to service debt. Finally, Liu observed that the recent U.S. announcement of another arms sale to Taiwan made it more difficult for the Chinese Government to explain its policies supportive of the U.S. to the Chinese public. End Summary. 2. (SBU) SAFE DDG Liu Jiahua told Finatt on October 9 that SAFE is very concerned over the danger involved in lending U.S. treasuries to U.S. financial institutions in the repurchase agreement (repo) market, without some kind of guarantee against counterparty risk. With the collapse of Lehman Brothers, Liu said, they no longer believe any institution can be considered low risk. In response, Finatt emphasized the stability of large, deposit-taking U.S. banks. He also noted that the U.S. FDIC's expanded powers include the ability to guarantee bank liabilities to support the banking system and address the systemic financial risk that could be caused by a potential bank failure. Liu remained non-committal on the possible resumption of lending, but agreed that SAFE had sufficient confidence in those institutions and would consider a system whereby the Federal Reserve or other U.S. government agency would act as a guarantor. 3. (SBU) Liu stressed that SAFE's policy towards U.S. Government-supported Enterprise (GSE) debt - specifically, Fannie Mae and Freddie Mac -- has not changed, and he thought the amount of debt purchased has not decreased. If there has been a shift by the portfolio managers toward shorter-term debt, he believed it was due to uncertainty on what might happen to Fannie Mae and Freddie Mac in the longer-term (beyond five years) future, particularly if those GSEs eventually are privatized. Liu agreed that the ideal form would be to separate existing guaranteed liabilities from any new, privatized entities. He emphasized that SAFE did not want to take any actions that would affect the market and/or undermine confidence in the GSEs. New Worry: Sovereign Risk ------------------------- 4. (SBU) Though Liu again emphasized that SAFE has not changed its policy, he said they now also are focusing more on sovereign risk among developed countries. Given the large amount of debt guaranteed by the United States and European governments, Liu said there is concern that this could impact their fiscal budgets and their ability to service debt. In that regard, Liu said USD depreciation is also a concern. Public Opinion a Factor ----------------------- 5. (SBU) In conclusion, Liu said SAFE has noted the actions taken to date by the U.S. government to provide relief and restore investor confidence; those measures are very welcome and positive. The SAFE working group on the crisis would welcome opportunities to exchange views with their U.S. counterparts. Liu - citing an Internet discussion forum -- said that as in the United States, the Chinese leadership must pay close attention to public opinion in forming policies. In that regard, the recent announcement that the United States intends to sell another arms package to Taiwan increases the difficulty the Chinese Government faces in explaining any supporting policies to the Chinese public (ref). PICCUTA |
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