US Secretary of State Hillary Clinton sought to reassure Asian investors over US debt worries on Monday, saying she was confident President Barack Obama would ultimately reach a deal with congressional leaders to prevent a catastrophic default. “I'm confident that Congress will do the right thing and secure a deal on the debt ceiling, and work with President Obama to take the steps necessary to improve our long-term fiscal outlook,” Clinton said in a speech in Hong Kong. Clinton's speech to business leaders was overshadowed by Washington's failure thus far to craft a deal to extend the US government's borrowing authority, but she said the political wrangling was both natural and healthy. “Let me assure you we understand the stakes. We know how important this is for us and how important it is for you.” A sharply divided US Congress pursued rival budget plans Monday that appeared unlikely to win broad support, pushing the US closer to a ratings downgrade and debt default that could trigger global economic calamity. Fred Neumann, co-head of Asian economics research at HSBC in Hong Kong, said US policymakers know Asian investors, who have large exposures to US Treasuries, are desperate for reassurance that the United States will not default on its debt. “The US in particular as well as Western Europe will need to rely on much more forceful Asian demand in the next few years, to be able to pay off their debt and make sure that the default doesn't occur,” he said. Clinton urged Asian governments to do more to boost local consumer demand, and to take a new look at policies ranging from intellectual property rights to support for state enterprises at the expense of private entrepreneurs. Clinton was relatively soft on traditional bashing points, usually directed at China, highlighting that both Washington and Beijing are trying to resolve their differences ahead of a series of major international meetings including the East Asia Summit in November. While she did not directly target China, Clinton's message Monday was clearly intended for Beijing, which US officials have accused of using regulatory measures and an artificially low exchange rate to rack up some $3.2 trillion in foreign exchange reserves. US officials said China was clearly concerned about the US debt impasse and had repeatedly urged Washington to get its economic house in order. Clinton's visit, the first by a US Secretary of State to Hong Kong since Beijing resumed control over the city from Britain in 1997, comes at the end of a round-the-world trip during which China was often at the top of the agenda. “We are a resident power in Asia — not only a diplomatic or military power, but a resident economic power. And we are here to stay,” she said.
