China demands US addresses debt problem
Source: Agencies |
August 7, 2011, Sunday
|
Print Edition
Print Edition
The United States lost its top-tier AAA credit rating from Standard & Poor's, drawing a blast of criticism yesterday from its biggest creditor, China, and deepening investors' alarm over the eurozone's debt crisis.
China said Washington only had itself to blame and called for a new stable global reserve currency.
"The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," Xinhua news agency said in a commentary.
The S&P cut in the US long-term credit rating by a notch to AA-plus resulted from concerns about the nation's budget deficits and climbing debt burden. The move is likely to raise borrowing costs for the US government, companies and consumers.
By calling the outlook "negative," S&P signaled another downgrade is possible in the next 12 to 18 months.
Worries that the United States was slipping into recession and the eurozone debt crisis was spreading drove a weeklong rout in which US$2.5 trillion was wiped off global markets.
China roundly condemned the US for its "debt addiction" and "short-sighted" political wrangling and said the world needed a new stable global reserve currency.
"China, the largest creditor of the world's sole superpower, has every right now to demand the US address its structural debt problems and ensure the safety of China's dollar assets," the Xinhua commentary said.
It urged the US to cut military and social welfare expenditure. It also said further credit downgrades would likely undermine the world economic recovery and trigger new financial turmoil.
"International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.
British business minister Vince Cable backed China's call for a new stable global reserve currency but said for now the US dollar was key.
"It would be a sensible way for the world to move but is not something we're going to do overnight," Cable told BBC TV.
China said Washington only had itself to blame and called for a new stable global reserve currency.
"The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," Xinhua news agency said in a commentary.
The S&P cut in the US long-term credit rating by a notch to AA-plus resulted from concerns about the nation's budget deficits and climbing debt burden. The move is likely to raise borrowing costs for the US government, companies and consumers.
By calling the outlook "negative," S&P signaled another downgrade is possible in the next 12 to 18 months.
Worries that the United States was slipping into recession and the eurozone debt crisis was spreading drove a weeklong rout in which US$2.5 trillion was wiped off global markets.
China roundly condemned the US for its "debt addiction" and "short-sighted" political wrangling and said the world needed a new stable global reserve currency.
"China, the largest creditor of the world's sole superpower, has every right now to demand the US address its structural debt problems and ensure the safety of China's dollar assets," the Xinhua commentary said.
It urged the US to cut military and social welfare expenditure. It also said further credit downgrades would likely undermine the world economic recovery and trigger new financial turmoil.
"International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.
British business minister Vince Cable backed China's call for a new stable global reserve currency but said for now the US dollar was key.
"It would be a sensible way for the world to move but is not something we're going to do overnight," Cable told BBC TV.
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