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China says US deal 'failed to defuse debt bomb'
[Dawn] China warned Wednesday that tortured efforts to raise the US debt ceiling had failed to defuse Washington's "debt bomb", and that it would further diversify its currency holdings away from the dollar.US President Barack B.O.Obama finally signed an emergency austerity bill on Tuesday that averted what would have been a catastrophic debt default for the world's biggest economy. But a failure to rein in US borrowing could "jeopardise the well-being of hundreds of millions of families within and beyond the US borders", the official Xinhua news agency said in a blistering commentary on the deal. "The months-long tug of war between Democrats and Republicans...failed to defuse Washington's debt bomb for good, only delaying an immediate detonation by making the fuse an inch longer," the commentary said. "Meanwhile, ...back at the scene of the crime, Lieutenant Queeg had an idea: there was a simple way to tell whether Manetti had been the triggerman -- just look at his shoes!... the madcap farce of brinkmanship has disclosed yet another ticking bomb in the heartland of the sole superpower in the world -- the crippling tendency to politicise the economics while trivialising the politics." China, sitting on the world's biggest foreign exchange reserves of around $3.20 trillion as of the end of June, is the largest holder of US Treasuries. Xinhua's comments came as China's central bank said it would continue to diversify its foreign currency investments, signalling growing concerns in Beijing over the US debt crisis and economic downturn. "China's foreign exchange reserves will continue following the principle of diversified investment, enhancing risk management," People's Bank of China governor Zhou Xiaochuan said in a statement. "Large fluctuations and uncertainty in the US treasury bond market will affect the stability of international monetary and financial systems, which will hurt global economic recovery." The statement, in which he also welcomed the plan, was the first official response to the deal to raise to the limit on US borrowing and enact at least $2.1 trillion in spending cuts over the next decade. Posted by: Fred 2011-08-04 |
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