Despite Congressional gridlock over the U.S. debt ceiling, Secretary of State Hillary Clinton said Monday that she believes a last-minute deal will be struck to avert a default and ensure that America remains a driver of global growth.
"I am confident that Congress will do the right thing and secure a deal on the debt ceiling," Clinton told business leaders in Hong Kong on the tail end of a nearly two-week trip through Europe and Asia.
Emphasizing the U.S.' importance to Asia's economy and its security, Clinton added that "we are a resident economic power in Asia … we are here to stay."
The threat of a default is rattling global markets, including those in Asia. Major indices here slid after U.S. lawmakers' weekend negotiations failed to produce a deal to lift the $14.3-trillion U.S. debt ceiling and allow the U.S. to pay its bills. Hong Kong's Hang Seng index closed down 0.7% while the Shanghai Composite Index and Japan's Nikkei Stock Average fell 3% and 0.8% respectively.
In prepared remarks to the American Chamber of Commerce here, Clinton called on Asian economies to boost domestic demand and to promote "open, free, transparent and fair" competition so U.S. companies aren't "forced to trade away their intellectual property just to enter or expand in a foreign market." Some nations are making "short term gains" with less-than-transparent business practices, she said.
While Clinton didn't criticize China directly, many of her remarks appear to be directed at the country, which counts Hong Kong as a special administrative region.
The Obama administration has argued that China's undervalued currency, by making Chinese exports cheaper, hurts American manufacturers and boosts U.S. unemployment. Meanwhile, U.S. business leaders have called for greater protection of intellectual property in China and criticized Chinese government policies that they say favor domestic industries.
Clinton's remarks come at a time when Asia's booming economies are increasingly driving global growth. The U.S., recognizing the region's growing importance, has sought to expand existing trade ties and forge new ones. The Obama administration is seeking Congressional approval for the Korea-U.S Free Trade Agreement, which it estimates will eliminate tariffs on 95% of U.S. consumer and industrial exports within five years.
The Obama administration is also championing a regional trade agreement called the Trans-Pacific Partnership, which it's negotiating with eight countries. Clinton says the U.S. hopes to have the framework of this agreement in place for the Asia-Pacific Economic Cooperation forum in November.
