Clinton says US economic model works despite woes

MATTHEW LEE - Associated Press
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Hong Kong Chief Executive Donald Tsang, right, reaches out for a handshake with an unidentified person as he meets with U.S. Secretary of State Hillary Rodham Clinton, center, at the Government House in Hong Kong on Monday July 25, 2011. (AP Photo/Saul Loeb, Pool)

HONG KONG (AP) — U.S. Secretary of State Hillary Rodham Clinton sought Monday to reassure financial markets in Asia and around the world that America's economy is sound despite its current woes and the deadlock over the national debt.

In a speech to the U.S. Chamber of Commerce in Hong Kong, Clinton predicted a deal on the debt would be reached before the August 2 deadline to avoid an unprecedented default. She said the partisan debate over the debt ceiling was a fact of life in American politics.

"The political wrangling in Washington is intense right now," Clinton said. "But these kinds of debates have been a constant in our political life throughout the history of our republic. Sometimes they are messy ... but this is how an open and democratic society ultimately comes together to reach the right solution. So I am confident that Congress will do the right thing and secure a deal on the debt ceiling and work with President Obama to take steps necessary to improve our long-term fiscal outlook."

World financial markets are warily watching developments in Washington, and China, the largest foreign holder of U.S. debt, is particularly concerned. Asian stocks were down early Monday, with Japan's Nikkei 225, China's Shanghai Composite Index and Hong Kong's Hang Seng Index each losing about 0.6 percent.

"Of course, countries in this region are grappling with challenges," Clinton said. "But we are bullish on Asia's future. And while the United States is facing its own challenges, make no mistake: We are bullish on America's future, too."

Clinton appealed to China and others not to lose faith in the American economic model, which she said is resilient and has recovered from numerous past crises.

"America remains an 'opportunity society,'" she said, "a country of possibility and mobility where a brilliant idea hatched in a college dorm room or a product invented in a garage can find a global market and grow into a multibillion-dollar company."

She urged Asia to embrace open and fair economic policies that have propelled growth in the past.

Because of those principles, "every time in history when the United States has experienced a downturn we have overcome it," she said.

Clinton called on nations around the world to play by the same rules, ending protectionism and easing other trade barriers as well as combating corruption and defending intellectual property rights.

"All who benefit from open, free, transparent and fair competition have an interest and a responsibility to follow its rules," she said. "Enough of the world's commerce takes place in developing nations that leaving them out of the rules-based system would render that system unworkable — and ultimately that would impoverish everyone."

Her speech in Hong Kong was delivered at the tail end of a 12-day, around-the-world diplomatic tour that began in Europe but has focused on Asia for the past week. Clinton arrived in this former British colony late Sunday after three days in Bali, Indonesia, where she attended a regional security forum at which North Korea and tensions in the South China Sea topped the agenda.

Before Monday's address, Clinton met with senior officials from Hong Kong's government. Afterward, she will drive to Shenzhen in southern mainland China for talks with Chinese State Councilor Dai Bingguo. Clinton will return to Washington later Monday.