Tags: China | US | Debt | Irresponsible

China: US Debt Fight 'Dangerously Irresponsible'

Friday, 29 Jul 2011 09:19 AM

 

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China's state-run news agency has sharply criticized U.S. politicians for flirting with a disastrous debt default, saying the world's largest economy has been "kidnapped" by "dangerously irresponsible" U.S. politics.

So far, no Chinese policymakers have publicly commented on the debt standoff.

But in a strongly worded commentary, the government-run Xinhua agency said it was "unfortunate and disappointing" that other countries would have to pay if American lawmakers do not raise the U.S. government's debt ceiling before the Aug. 2 deadline.

"It is arguably true that the ongoing tug of war in Washington is Uncle Sam's own business, as the United States has not yet defaulted on its debt," Xinhua said in remarks published on Thursday.

"However, the ugliest part of the saga is that the well-being of many other countries is also in the impact zone when the donkey and the elephant fight," referring to the symbols of the U.S. Democratic and Republican parties.

Failure by U.S. politicians to agree on a mix of revenue increases and spending cuts has prevented Congress from lifting the U.S. government's $14.3 trillion borrowing limit before it runs out of cash to pay its bills.

The prospect of a U.S. debt default has unnerved global investors because it would hobble the global economy and roil financial markets by raising bond yields and borrowing costs, a point stressed by Xinhua.

"Given the United States' status as the world's largest economy and the issuer of the dominant international reserve currency, such political brinkmanship in Washington is dangerously irresponsible," it said.

"It risks, among other consequences, strangling the still fragile economic recovery of not only the United States but also the world as a whole."

"Developing economies would suffer a traumatic blow, and the world economy would plunge into yet another recession on the heels of the one that struck in 2008, and (which )also originated in the United States — only the mess could be much nastier this time," Xinhua said.

As the largest creditor to the United States, Beijing has repeatedly urged Washington to protect its dollar investments, which are estimated to account for about 70 percent of its $3.2 trillion in foreign exchange reserves, the world's largest.

Xinhua also urged U.S. leaders to tighten its belt and cut spending and its "debt addiction."

"It is time for Washington to revisit the time-tested common sense that one should live within one's means," it lectured.

© 2014 Thomson/Reuters. All rights reserved.

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