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White House repeats call for China to boost demand

Published 01/12/2010, 04:45 PM
Updated 01/12/2010, 04:48 PM

WASHINGTON, Jan 12 (Reuters) - The White House on Tuesday repeated its wish for China to stimulate domestic demand and buy more U.S. exports, but declined to discuss concerns that the economy of its largest creditor was overheating.

"It remains to be seen ... how that will play out," said said Ben Rhodes, a senior foreign policy aid to President Barack Obama, in response to a question during an online forum about reports that China's growth was unsustainable.

"I don't think that there is any certainty, for instance, that there will be worst case scenario-type developments in China," said Rhodes, who is one of Obama's deputy national security advisers.

Chinese bank lending surged in the first week of 2010, according to data earlier on Tuesday, intensifying concern the world's third-largest economy was running too hot and Beijing will be forced to dampen growth by tightening policy.

The United States, which is trying to recover from the worst recession in 70 years, wants China to turn from a long-time focus on exports and to invest its vast foreign exchange reserves in lifting consumption back home.

Rhodes did not comment on currency issues -- a delicate topic between China and the United States, where critics accuse Beijing of keeping its yuan currency artificially low against the dollar to make its exports cheaper for U.S. consumers.

China holds a shade under $800 billion of U.S. government debt and is the United States' largest creditor.

Washington wants China and other big trading nations to adjust to a world where America is not the consumer of last resort. This was its position at a September Group of 20 summit in Pittsburgh and Rhodes stuck closely to that line.

"For China in particular, we've emphasized the need for balanced and sustained growth," he said. "We want to get to a more rebalanced global economy, where demand is spread out in different places and isn't so focused in the United States."

(Reporting by Alister Bull; Editing by Cynthia Osterman)

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