Clinton confident about resolution to debt crisis

[July 25, 2011]  SHENZHEN, China (AP) -- U.S. Secretary of State Hillary Rodham Clinton moved Monday to reassure China and Asian financial markets that resolution to America's debt crisis will be reached, as she sought China's help in pressing North Korea to demonstrate seriousness in nuclear disarmament talks and easing tensions in the South China Sea.

After delivering a speech in Hong Kong where she maintained that the U.S. economy is sound despite its current woes and the debt deadlock, Clinton drove to China's southern mainland city of Shenzhen for talks with Chinese State Councilor Dai Bingguo, Beijing's top foreign policy official.

Officials traveling with Clinton said she would impress on Dai the importance the Obama administration attaches to resolving the standoff over the debt by an Aug. 2 deadline to avoid an unprecedented default. World financial markets are warily watching developments in Washington, and China, the largest foreign holder of U.S. debt, is particularly concerned. Asian stocks were down early Monday due to nervousness about the situation.

Clinton, in her address to the U.S. Chamber of Commerce in Hong Kong, said the partisan debate in Washington over the debt ceiling was a fact of life in American politics.

"The political wrangling in Washington is intense right now," Clinton said. "But these kinds of debates have been a constant in our political life throughout the history of our republic. Sometimes they are messy ... but this is how an open and democratic society ultimately comes together to reach the right solution. So I am confident that Congress will do the right thing and secure a deal on the debt ceiling and work with President Obama to take steps necessary to improve our long-term fiscal outlook."

In Shenzhen, the officials said Clinton would repeat that message and raise issues she discussed last week at an Asian security forum in Indonesia. Those include renewed dialogue between North and South Korea, her invitation to a senior North Korean official to visit the United States to discuss the possible resumption of multiparty nuclear negotiations and U.S. concerns about rising tensions between China and its neighbors over competing claims in the South China Sea.

The officials, who spoke on condition of anonymity to describe private diplomatic discussions said Clinton would tell Dai of Washington's "strong interest in making sure that China is conveying to North Korea our determination to see real progress if we're to move forward and not simply business as usual." The official said the U.S. expects China to play a strong-behind-the-scenes role in pushing the North Koreans to repair ties with the South and commit to serious negotiating over getting rid of its nuclear weapons.

On Sunday, Clinton announced that she had invited North Korea's vice foreign minister to visit New York so that U.S. officials can assess Pyongyang's intentions. The invitation was made after a crucial meeting on the sidelines of the Association of South East Asian Nations forum in Bali on Friday between nuclear negotiators from North and South Korea. It was the first such meeting since disarmament talks collapsed in 2008, and the envoys agreed to work toward the resumption of the six-nation negotiations.

Washington is insistent that it will not reward bad behavior by the North, a point Clinton made clear when she announced the invitation to Kim Kye Gwan. "We are open to talks with North Korea, but we do not intend to reward the North just for returning to the table," she said. "We will not give them anything new for actions they have already agreed to take. And we have no appetite for pursuing protracted negotiations that will only lead us right back to where we have already been."

The U.S. officials said Clinton would also explore with Dai possible ways to move forward on resolving South China Sea disputes after China and ASEAN members agreed on a first step toward settling claims on territory and resources in the strategic and potentially oil-rich waters. The U.S. and ASEAN want to introduce a binding code of conduct for the South China Sea that could reduce increasing incidents of intimidation alleged against China by the Philippines and Vietnam.

China, which claims sovereignty over the entire South China Sea, has long opposed such a code.

Clinton's brief stop in Shenzhen comes ahead of an official visit to China next month by U.S. Vice President Joe Biden as the Obama administration seeks to reassert America's presence and influence in the Asia-Pacific in the face of China's rise.

In Hong Kong, Clinton stressed that the United States is a "resident power" in the region and would not cede its role as a political, military, diplomatic or economic leader.

"We are here to stay," she said.

Clinton appealed to China and others not to lose faith in the American economic model, which she said is resilient and has recovered from numerous past crises.

And, she urged Asia to embrace the same model along with open, fair and transparent economic policies that have propelled growth in the past. Because of those principles, "every time in history when the United States has experienced a downturn we have overcome it," she said.

Clinton called on nations around the world to play by the same rules, ending protectionism and easing other trade barriers as well as combating corruption and defending intellectual property rights.

"All who benefit from open, free, transparent and fair competition have an interest and a responsibility to follow its rules," she said. "Enough of the world's commerce takes place in developing nations that leaving them out of the rules-based system would render that system unworkable -- and ultimately that would impoverish everyone."

[Associated Press; By MATTHEW LEE]

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