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October 8, 2013

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China calls for resolution to debt crisis

Source: Agencies | October 8, 2013, Tuesday | Print Edition

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

China, the US government's largest creditor, is “naturally concerned about developments in the US fiscal cliff,” Vice Finance Minister Zhu Guangyao said in the Chinese government’s first public response to the October 17 deadline in the US for raising the debt ceiling.

“The United States is totally clear about China's concerns about the fiscal cliff,” Zhu said in Beijing, adding Washington and Beijing had been in touch over the issue.

“We ask that the United States earnestly take steps to resolve in a timely way before October 17 the political (issues) around the debt ceiling and prevent a US 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 US government moved into the second week of a shutdown with no end in sight, as Congress also confronted an October 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 US credit rating to “AA+” from “AAA” by agency Standard & Poors.

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.

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