China criticizes US debt handling, calls for responsible policies.
China recently hit back at US Treasury Secretary Janet Yellen’s criticism of Beijing’s handling of debt issues in developing countries. The Chinese embassy in Lusaka, Zambia, criticized the US over its own “catastrophic debt problem” and accused it of “sabotaging” other nations’ efforts to resolve debt problems. This criticism comes after recent easing in tensions between China and the US, which began in November, and talks between Yellen and her counterpart, Liu He, which both sides said were constructive and positive.
The US government has reached its borrowing limit and is taking extraordinary measures to meet its obligations. Economists and bond-market analysts anticipate the ceiling will have to be raised sometime in the third quarter to avert a US payments default, which would be economically damaging for the world’s biggest economy and the global financial system. China holds about $870 billion in US debt, according to the latest data for November.
China has become the world’s biggest creditor to developing countries, some of which are facing a mounting debt crisis. Yellen has repeatedly criticized Beijing for its perceived lack of engagement in a global effort to reduce debt burdens for developing nations, calling it the biggest obstacle to progress. The Chinese embassy in Lusaka called on the US to act on responsible monetary policies, cope with its own debt problem, and stop sabotaging other sovereign countries’ active efforts to solve their debt issues.
In 2011, state-owned Chinese news agency Xinhua criticized US handling of the debt situation, calling the political brinkmanship in Washington “dangerously irresponsible.” This week’s criticism of Yellen casts a shadow on hopes China may be pivoting away from its so-called Wolf Warrior approach raised by the transfer of a senior diplomat closely associated with the Foreign Ministry’s more confrontational shift in recent years.
The US government has reached its borrowing limit, leading to the need for extraordinary measures to meet its obligations. China holds about $870 billion in US debt and has become the world’s biggest creditor to developing countries. US Treasury Secretary Janet Yellen has criticized Beijing for its perceived lack of engagement in a global effort to reduce debt burdens for developing countries, calling it the biggest obstacle to progress. In response, the Chinese embassy in Lusaka, Zambia, criticized the US over its own “catastrophic debt problem” and accused it of “sabotaging” other nations’ efforts to resolve debt problems.
The US debt situation has been compared to the 2011 debt-ceiling showdown, when S&P Global Ratings cut the sovereign US rating from AAA. The move roiled markets and ended up damaging consumer confidence, hurting the economic recovery from the credit crisis. The Chinese news agency Xinhua criticized US handling of the debt situation, calling the political brinkmanship in Washington “dangerously irresponsible.”
This week’s criticism of Yellen by the Chinese embassy casts a shadow on hopes China may be pivoting away from its so-called Wolf Warrior approach. The Group of 20 nations has set up a so-called Common Framework that brings the Paris Club of traditional rich debtor countries together with China to try to restructure the debts of low-income countries on a case-by-case basis.
The US government’s debt situation is of great concern to the global economy and financial system. China’s criticism of US handling of the debt situation highlights the importance of responsible monetary policies and the need to address the US’s own debt problem. It also serves as a reminder of the need for the US to engage with the global debt crisis and work together with other countries, such as China, to resolve it.
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