MARCO WERMAN: China's delegation to this weekend's meeting will be looking closely at how the Americans perform. That's because China is by far America's largest creditor. The Chinese government's investment in US treasury bonds is worth nearly $1 trillion dollars. Today, the Chinese Prime Minister Wen Jiabao said he was concerned about that investment. Wen said, ï¿½Of course we are concerned about the safety of our assets. To be honest,ï¿½ he continued, ï¿½I'm a little bit worried.ï¿½ And he added that he wanted to implore the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets. Andrew Nathan is a professor of political science at Columbia University. His focus is China. Andrew, first of all, is there any chance that China would consider ending its relationship with the United States as its chief creditor? That's not likely, is it?
ANDREW NATHAN: It's not likely. They really can't, because they earn a lot of dollars by selling things to us and they have those dollars. And once they have them they have to put them someplace ï¿½ in Euros and Yen, and there aren't that many places to put dollars. And right now the US government is still the best place to park dollars.
WERMAN: Explain that.
NATHAN: Well, they earn dollars. And I mean, if you have saved some money in dollars, you're going to have to put that money someplace ï¿½ into the bank, buy stocks. You could change it into Euros or Yen, but you don't want to do that because the value of the dollar is more secure than the value of the Euro or the Yen. And the Chinese have that problem and on a very, very big scale. If they move money around into some other currency, it would actually hurt the value of the dollars that they hold. So treasury bonds is relatively safe.
WERMAN: When Prime Minister Wen made his comments, it's been reported that he was expecting questions about Chinese holdings of US debt. So how measured and calibrated do you think his remarks were? What was he trying to achieve in expressing worry and just worry?
NATHAN: As you say, he was expecting it, and I'm sure that his remarks were carefully stated. And I suspect that in quiet channels, the Chinese have given very, very specific advice or requests of the US government. I think in general they don't want protectionism to spring up in the United States. That's certainly true. And they don't want the US government to manage the financial crisis in such a way as it would unleash inflation and thereby degrade the value of their money. You might think of the Chinese as being in the same position that you and I are with our 401k. We're holding dollars, and we're going to be holding those dollars for some decades. And we don't want to see the value of those dollars go up in smoke. So they don't want inflation. But I must say that the Chinese elbow room for putting pressure on the United States is quite limited. And that runs in both directions ï¿½ our ability to put pressure on them is rather limited. But the thing is that they're stuck in the same boat with us and vice versa. And so they really can't afford to stop buying treasury bills. They can't afford to unload a lot of the dollar assets.
WERMAN: And the fact that these remarks came from Prime Minister Wen Jiabao, the # 3 in the Chinese hierarchy, what do you make of the fact that it was he who delivered this message of concern?
NATHAN: In the Chinese system, the Premier manages the economy. So I think part of his message here is to show his domestic audience that he's standing up to the Americans and defending the financial interests of his country. But that's his job, so he's the one who would be the one to answer that question.
WERMAN: Andrew Nathan at Columbia University, thank you.
NATHAN: You're welcome.