Top US spy warns that China would seek to exploit a debt default
- Director of National Intelligence Avril Haines says Beijing and Moscow are almost certain to use it as evidence that the US political system is dysfunctional
- A White House official says China would ‘love’ to see the country pushed to the ‘chaos’ of a debt default
US Director of National Intelligence Avril Haines has warned that China and Russia would probably seek to exploit a failure by Washington to raise the debt ceiling, while the Biden administration says Beijing would “love” to see the chaos of a US default.
It is “almost a certainty” that both countries would use such an event for propaganda purposes through “information operations”, using it as evidence that the US political system is dysfunctional, Haines told the Senate Armed Services Committee on Thursday.
Haines said the intelligence community did not have information to provide an independent assessment, but she said that a default would created “global uncertainty” about the value of the dollar, US leadership and American institutions.
Haines’s comments come as President Joe Biden’s administration faces an acrimonious political battle over increasing the US debt limit.
The administration has insisted that there will be no debt-limit negotiations with House Speaker Kevin McCarthy and fellow Republicans who are demanding that an increase in the borrowing ceiling be tied to cuts in spending.
Haines also testified that the continuing war in Ukraine has increased Chinese President Xi Jinping’s leverage over Russian President Vladimir Putin.
She said that Putin has likely scaled back his immediate ambitions in Ukraine as Russia’s efforts to make territorial gains have stalled.
China cutting US Treasury holdings ‘rational step’ amid debt ceiling crisis
Senior White House economics official Shalanda Young framed the debt ceiling situation as “no less than a test of what works in this world. Does democracy still work, or does the Chinese way work?”
Young, the director of the Office of Management and Budget, said China would “love” to see Washington fail to extend the national debt ceiling and push the country into the “chaos” of default.
“They love to see chaos in the American system,” she told reporters.
“They love to see that we can’t do our basic jobs.”
Additional reporting by Agence France-Presse
