ECONOMY

China welcomes US debt agreement, but Xinhua pours scorn on politicians

But Xinhua commentary says the deal will only prolong the fuse of the 'debt bomb' and delay 'bankruptcy' of global confidence in America

PUBLISHED : Thursday, 17 October, 2013, 10:06pm
UPDATED : Friday, 18 October, 2013, 4:36am
 

China yesterday welcomed the resolution of the US debt ceiling deadlock, saying it will contribute to global economic stability, but Xinhua poured scorn on Washington's politicians.

"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 said during a regular press briefing.

Her comments came as Xinhua said in a bylined commentary that despite the deal, "such move of passing a transient bill was no more than prolonging the fuse of the US debt bomb one inch longer".

The last-gasp plan by Congress staves off the most pressing crisis by extending the US Treasury's borrowing authority until February 7. Lawmakers also reached agreement on funding the government until January 15.

At the end of a weeks-long stalemate, President Barack Obama managed to ward off a direct assault on his health care law by House Republicans and forced them to allow an increase in the US debt ceiling without conditions.

"There is a lot of work ahead of us, including our need to earn back the trust of the American people that has been lost over the last few weeks," Obama said. He hoped that lessons of the stalemate "will be internalised" by lawmakers.

Speaking later in the State Dining Room of the White House, Obama said America could recover if Republicans and Democrats worked together and finished by the end of the year work on a "responsible" budget, passed a new immigration law and approved a farm bill.

But Xinhua said the deal had "done nothing substantial, but postponing once again the final bankruptcy of global confidence in the US financial system and the intactness of dollar investment".

The commentary was written by Liu Chang, who raised eyebrows a few days earlier with another commentary calling for "a de-Americanised world".

In a separate bylined commentary released barely an hour after Obama signed the deal, another Xinhua writer charged that US politicians had held the rest of the world hostage in the crisis.

"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."

It added: "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. US Treasury bonds may no longer be safe investment."

The Chinese ratings agency Dagong Global Credit Rating cut its credit rating for US sovereign debt by one notch to A-minus, saying Congress had failed to solve the cause of its debt problem.

The agreement does not eliminate the core conflict in Congress over fiscal policy. Republicans say that in the next round of budget talks they will still refuse to raise taxes, while Democrats say they will not cut entitlements.

IMF managing director Christine Lagarde welcomed the deal, but said the shaky American economy needed more stable long-term finances.

"It will be essential to reduce uncertainty surrounding the conduct of fiscal policy by raising the debt limit in a more durable manner," Lagarde said.

The markets reacted positively, with Asian stock markets gaining modestly. But the US dollar and European shares fell as market relief gave way to worries over the economic impact of the 16-day government shutdown. US stocks were lower in early trading.

Agence France-Presse, Reuters, Associated Press

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