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POLITICAL ECONOMY
US debt ceiling resolution helps global stability: China
by Staff Writers
Beijing (AFP) Oct 17, 2013


Chinese agency downgrades US credit rating
Beijing (AFP) Oct 17, 2013 - A Chinese ratings agency downgraded its US sovereign credit rating Thursday despite Washington's resolution of the debt ceiling deadlock, warning that fundamentals for a potential default remained "unchanged".

Dagong lowered its ratings for US local and foreign currency credit from A to A-, maintaining a negative outlook, the agency said in a statement.

The announcement came after the US Congress passed and President Barack Obama signed a bill that extends the nation's borrowing authority and ends a two-week government shutdown.

"The fundamental situation that the debt growth rate significantly outpaces that of fiscal income and gross domestic product remains unchanged," Dagong said in the statement, adding Washington's solvency was vulnerable as old debts were still repaid through raising new debts.

"Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future," it said.

Dagong made headlines in August 2011 when it lowered its main rating for US sovereign debt after Congress passed an earlier bill to raise Washington's debt ceiling.

The agency, which is far less prominent than long-established Western competitors including Moody's, Fitch and Standard and Poor's, has been working to further raise its profile.

China's official news agency Xinhua said Thursday in a bylined commentary that US politicians had held the rest of the world hostage in the crisis.

But Beijing welcomed the agreement, saying it will contribute to global economic stability.

China on Thursday welcomed the resolution of the US debt ceiling deadlock, saying it will contribute to global economic stability.

"The US is the largest economy in the world and the proper resolution of this issue serves not only its own interest but also world economic stability and development," foreign ministry spokeswoman Hua Chunying told reporters in a regular press briefing.

"We welcome the progress in resolving the issue."

Her comments came after China's official news agency Xinhua said in a bylined commentary that US politicians had held the rest of the world hostage in the crisis.

The bylined English-language commentary was released barely an hour after President Barack Obama signed the deal ending the federal government shutdown and raising the limit on Washington's borrowing.

"The founding fathers of the United States of America created Congress for the sake of balance of power," it said.

"They would turn in their graves if they saw their design being kidnapped for political brinkmanship.

"Although they clearly knew the dire consequences of a default on the US economy and the rest of the world, the Democrats and Republicans played brinkmanship into the final moment for the sake of partisan interests."

The government shutdown, the narrowly-averted threat of default and the horse-trading surrounding the situation showed that "Congress itself has become the problem", it said.

China is a one-party state where the Communist authorities retain an iron grip on power, regularly ruling out any move towards Western-style democratic politics.

"With the world economy struggling in crisis, politicians at Capitol Hill seem to be too much engaged in political wrangling to remember their country's responsibilities as the world's largest economy, and, as they say, the world leader in other fields," the Xinhua commentary said.

"Brinkmanship of this kind means US domestic politics is holding the whole world hostage."

China has the world's largest foreign exchange reserves, most of them held in dollars, and is the largest foreign holder of US Treasury bills, with $1.28 trillion according to the latest available figures from Washington.

"The saga in Washington is teaching America's creditors a lesson: US politicians are ready to fight each other at the expense of debt-holders' interests," the commentary said.

"US Treasury bonds may no longer be safe investment," it added, advising "domestic or foreign" investors "to make plan B".

"At the same time, Uncle Sam is strongly advised to drop this dangerous game of political brinkmanship to win back confidence if it wants to maintain its role as the world leader," it said.

US politics held world hostage in debt crisis: Xinhua
Beijing (AFP) Oct 17, 2013 - US politicians have held the rest of the world hostage in the crisis over the debt ceiling, China's official news agency Xinhua said Thursday.

The remarks came in a bylined English-language commentary released barely an hour after President Barack Obama signed the deal ending the federal government shutdown and raising the limit on Washington's borrowing.

"The founding fathers of the United States of America created Congress for the sake of balance of power," it said. "They would turn in their graves if they saw their design being kidnapped for political brinkmanship.

"Although they clearly knew the dire consequences of a default on the US economy and the rest of the world, the Democrats and Republicans played brinkmanship into the final moment for the sake of partisan interests."

The government shutdown, the narrowly-averted threat of default and the horse-trading surrounding the situation showed that "Congress itself has become the problem", it said.

China is a one-party state where the Communist authorities retain an iron grip on power, regularly ruling out any move towards Western-style democratic politics.

"With the world economy struggling in crisis, politicians at Capitol Hill seem to be too much engaged in political wrangling to remember their country's responsibilities as the world's largest economy, and, as they say, the world leader in other fields," the Xinhua commentary said.

"Brinkmanship of this kind means US domestic politics is holding the whole world hostage," it added.

China has the world's largest foreign exchange reserves, most of them held in dollars, and is the largest foreign holder of US Treasury bills, with $1.28 trillion according to the latest available figures from Washington.

"The saga in Washington is teaching America's creditors a lesson: US politicians are ready to fight each other at the expense of debt-holders' interests," the commentary said.

"US Treasury bonds may no longer be safe investment," it added, advising "domestic or foreign" investors "to make plan B".

"At the same time, Uncle Sam is strongly advised to drop this dangerous game of political brinkmanship to win back confidence if it wants to maintain its role as the world leader," it said.

.


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