US, China won't slow government spending too soon (Extra)

Jul 27, 2009, 22:44 GMT

Washington - The United States and China agreed to maintain aggressive measures to stimulate their economies until a global recovery takes hold, US officials said after talks with their Chinese counterparts on Monday.

Both countries have launched massive stimulus packages to keep their economies afloat during the global recession, and each was 'grappling with the timing of the withdrawal,' said David Lovinger, the US Treasury Department's senior coordinator for China affairs.

Lovinger told reporters that both sides agreed they should not cut spending 'too soon,' risking another dip just as the economy is recovering.

But neither government wants to wait too long to apply the brakes: 'They have to take place at the right time and not let another set of imbalances, bubbles build up,' Lovinger said.

Top US and Chinese officials began a two-day gathering Monday in Washington, focusing primarily on the state of the global economy and confronting climate change.

Top of the US list of concerns is pushing China to speed the restructuring of its economy spur its own consumer spending and move away from overreliance on export earnings. Lovinger said there was 'notable agreement that the world has changed.'

'If China's gonna grow, it's not gonna be able to grow by exporting to the United States and as far as we can tell to the rest of the world,' he said. 'China's gonna have to promote more home- grown, consumption led growth.'