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Treasury Secretary: US Economy is Healthy


Treasury Secretary Henry Paulson says he is confident about the health of the U.S. economy, following a week of stock market volatility that has prompted American politicians to question U.S. government borrowing from countries like China. He made the comments Sunday just before departing on an Asian trip that includes Japan, South Korea and China. VOA's Stephanie Ho has more from Washington.

Charles Rangel, the chairman of the House Ways and Means Committee, said he hopes last week's sharp fall in U.S. stock markets is, in his words, a temporary "blip." And, he said, he is happy to see signs of recovery. At the same time, he told Fox News Sunday, he believes the downturn underscored a much larger problem.

"It really shows the vulnerability of a great nation like the United States, when we owe trillions of dollars to foreign governments, and how they can manipulate, if they wanted to, our own markets over here," said Charles Rangel.

A few days earlier, Senator Hillary Clinton said the U.S. stock market troubles, which were partially sparked by concerns over the health of stock markets in China, demonstrates what she called "an erosion of U.S. economic sovereignty."

Together, Japan and China hold about 1$ trillion worth of U.S. debt.

Treasury Secretary Henry Paulson told the ABC television program This Week he sees other countries' financial interest in the U.S. economy as healthy. He said, in his private sector work as an investment banker, it was always a good sign if a company could attract capital.

"And, as I look at the demand for U.S. treasuries, I am very pleased to see demand from all around the world, from governments, from individuals," said Henry Paulson. "It is a positive that foreign investors want to own our treasuries."

He also disagreed with comments by former Federal Reserve Bank chairman Alan Greenspan, who last week said a recession in the U.S. economy is possible.

"No one has got a crystal ball," he said. "So, there is always a possibility there will be a downturn. It is always a possibility, but I do not see it. I think we have a healthy economy in the U.S."

He listed some positive signs for the U.S. economy, including strong exports and consumer spending. He added that real income for the average American worker rose about two-percent last year.

He also addressed the issue of U.S. economic relations with China, which some U.S. critics accuse of rampant copyright piracy and of artificially manipulating its currency.

"I do not believe we need to make them an enemy," said U.S. treasury secretary. "I think China is - this relationship is an important relationship, and the economic relationship is an important part of the overall relationship."

During his visit to China later this week, the treasury secretary delivers a speech on financial market reform in Shanghai.