China Pushes US to Take Steps to Avoid Debt Crisis

Monday, 07 Oct 2013 07:16 AM

 

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China urged Washington on Monday to take decisive steps to avoid a debt crisis and ensure the safety of Chinese investments, as a deadlocked U.S. Congress confronted a looming deadline to increase the nation's borrowing power or risk default.

China, the U.S. government's largest creditor, is "naturally concerned about developments in the U.S. fiscal cliff", Vice Finance Minister Zhu Guangyao said in the Chinese government's first public response to the Oct 17 deadline in the United States for raising the debt ceiling.

"The United States is totally clear about China's concerns about the fiscal cliff," Zhu told reporters in Beijing, adding that Washington and Beijing had been in touch over the issue.

"We ask that the United States earnestly takes steps to resolve in a timely way before Oct. 17 the political (issues) around the debt ceiling and prevent a U.S. debt default to ensure safety of Chinese investments in the United States and the global economic recovery," Zhu said.

"This is the United States' responsibility."

The U.S. government moved into the second week of a shutdown on Monday with no end in sight, as Congress also confronted an Oct. 17 deadline on raising the debt ceiling.

"We hope the United States fully understands the lessons of history," Zhu said, referring to a deadlock in 2011 that led to a downgrade of the U.S. credit rating to "AA-plus" from "AAA" by agency Standard & Poor's.

The last big confrontation over the debt ceiling, in August 2011, ended with an eleventh-hour agreement under pressure from shaken markets and warnings of an economic catastrophe if a default were allowed to happen.

Republican House Speaker John Boehner vowed on Sunday that there was "no way" Republican lawmakers would agree to a measure to raise the debt ceiling unless it included conditions to rein in deficit spending.

The comment raised fears that the U.S. Congress and Obama could fail to reach a deal on raising the ceiling by Oct. 17, when the Treasury has estimated it will have run out of cash.

© 2014 Thomson/Reuters. All rights reserved.

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