Beijing urged Washington yesterday to take decisive steps to avoid a debt crisis and ensure the safety of Chinese investments, as a deadlocked Congress confronted a looming deadline to increase US borrowing power or risk default.
China, the US government’s largest creditor, was “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 US is totally clear about China’s concerns about the fiscal cliff,” Zhu said, adding that Washington and Beijing had been in touch.
“We ask that the US 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 US and the global economic recovery,” Zhu said. “This is the US’s responsibility.”
The US government moved into the second week of a shutdown yesterday with no end in sight, as Congress also confronted an October 17 deadline on raising the debt ceiling.
“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 to AA+ from AAA by agency Standard & Poor’s.
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.