China asks US to protect its huge investments
Beijing: Concerned over the safety of its US bonds worth USD 1.2 trillion, Beijing today asked Washington to take decisive steps to end the debt crisis and protect its investments.
As the US government's largest creditor, China is "naturally concerned about developments in the US fiscal cliff", ?Chinese Vice Finance Minister Zhu Guangyao said.
This was the first time a Chinese official has commented on the October 17 deadline for the United States administration to raise its borrowing power or risk default.
"The United States is totally clear about China's concerns about the fiscal cliff," Zhu told a media briefing here. Washington and Beijing have been in touch on the issue, he said.
"We ask that the United States earnestly takes 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 responsibility of the US, he added. ?? China, which has foreign exchange reserves of over USD 3.2 trillion, the largest in the world, invested about USD 1.2 trillion in US bonds and currency, making it Washington’s largest creditor.
Beijing is concerned over the fallout of the looming downgrade of US debt.
The US government moved into the second week of a shutdown today amid indications that the political deadlock on the American budget could have potentially catastrophic global consequences.
"We hope the US fully understands the lessons of history," Zhu said, referring to a deadlock in 2011 that led to a downgrade of the US credit rating from "AAA" to "AA+" by rating agency Standard & Poors.
The last confrontation over the debt ceiling in 2011 ended with an agreement amid warnings of an economic catastrophe if a default were allowed to happen.
In Washington, Republican House Speaker John Boehner vowed that there was "no way" his party's lawmakers would agree to any steps to raise the debt ceiling unless it included conditions to rein in deficit spending.
His remarks sparked fears that the US Congress and President Barrack Obama could fail to reach a deal on raising the ceiling of the USD 17 trillion debt by October 17, by which date the Treasury has estimated it will have run out of cash.