In his visit to Beijing last week, US Treasury Secretary Timothy Geithner scored a victory his predecessor Henry Paulson never did - eliciting laughter from students at Peking University.

With his guru-like style, Paulson would never have earned a laugh by giving a speech on what a good thing it would be for China to drastically raise the renminbi-dollar exchange rate, even if he had a fistful of data and entertaining charts to back him up.

Geithner might look like a youthful graduate student at times, but he received hearty acceptance even as he gave no evidence and only a short statement - that China's financial assets in the US are safe.

The audience was composed of the same emotional young people who demonstrated angrily in the streets after NATO - using US Air Force bombers - leveled China's embassy in Belgrade in 1999, reportedly due to an intelligence error, and who wouldn't miss an opportunity to lead an outpouring of the nation's patriotic passion.

When students were told that China's massive holdings of US treasury bills are safe, why didn't they boo, or shout anti-American slogans, or call the speaker a cheater as some bloggers did on the Chinese Internet?

The laughter is an important message. Most Chinese tend to accept it as a fact that if the Americans are united and determined to keep a good promise, most probably they can do it.

Despite reports that many Chinese are worried about the risks for China's investment in the US, the Obama administration has showed a clear will to strike a balance between large economic stimulus and a measure of due fiscal discipline.

The laughter was accorded to Geithner on the grounds that the US quantitative easing has appeared neither lackluster nor reckless, and that there is enough force inside the US to strive for fiscal conservatism.

Of course at this stage no one is convinced that the balance can be achieved, and possibly it will be very difficult to do so. But abandoning the idea of such balance will inevitably lead to something worse for the US as well as China.

And as stimulus packages from a range of countries are preventing a free fall in the global economy, the chance for just such a balance looks more real than a mere luxury.

There are already signs in China of some manufacturing recovery. It is likely that China and the US can both stabilize later this year - although followed by a prolonged and at times painful period of adjustment.

That would be the time when such a balance should be in place. And once it is, the safety for China's existing dollar-denominated assets will probably no longer be an issue.

The same kind of patience should also be asked from the Americans. Some of Paulson's usual talking points, such as a large rise in the renminbi-dollar rate, sounded so easy as if it would only take the Chinese premier to push a button.

But China's dependency on export-oriented manufacturing and subsequent large investment in the US treasury bills has never been a deliberately chosen strategy.

Now, due to the crisis, Chinese companies and coastal cities have learned the hard way how limited the so-called global market actually is for their massive development enthusiasm and how dangerous it can be to rely entirely on exports rather than all types of trade. By the time they have learned to sell their products and services to the domestic market, the renminbi-dollar rate will probably no longer be an issue either.

younuo@chinadaily.com.cn

(China Daily 06/08/2009 page2)