Biden says China holdings in US debt safe

"You`re safe," Biden told students in a Q&A session at Sichuan University in Chengdu today after his address, when asked about concerns in China about US debt down grade as Beijing is being the largest creditor to Washington holding about 26 per cent of total US debt.

Noting that that the interest rate on US Treasury bills fell following the downgrade which ended up making them more sought-after than ever, Biden said, "We could not afford not to make good."

"If the world thought, my God, they`ve been downgraded and they`re not going to make good on their debt, it would not have been viewed as the safest haven in all the world to invest. We are still the single-best bet in the world in terms of where to invest," he said.

Biden argued that US will fix the problem as people of United States own 85 per cent of the national debt. Any politician that defaults would have to disappoint them, and "no politician wants to do that," he said.

But hours after he delivered the address, a commentary in Chinese state run Xinhua news agency said that "US, the world`s largest economy, has to realise that confidence cannot be established through mere rhetoric but only from responsible and tangible long-term practices".

Biden reassured "you are safe" to students and Chinese leadership during his current visit, "yet that is far from enough to soothe the concerns of China and the world as concrete actions are badly needed from the United States to honour its promises", it said.