China slams US for its failure to sort out debt mess

Beijing, Aug 7: China, the largest holder of US debt, on Aug 7 demanded that the US set itself on a corrective course to cure its "addiction" to debts following an unprecedented downgrade by credit rating agency Standard & Poors.

Contending that China had "every right" to demand that the US address its structural debt problems and ensure safety of China's dollar assets, the state-media lambasted Washington for letting its domestic electoral politics take the global economy "hostage".

"To cure its addiction to debts, the United States has to re-establish the common sense principle that one should live within its means," said a commentary on state-run Xinhua news agency, which advised a "little self-discipline" for the world's largest economy.

The statement came after S&P's downgraded the sovereign rating of the US from the top-most ''AAA'' level for the first time in history raising concerns over the creditworthiness of the country. The move naturally worried China, given the fact that it is the single largest lender to the US.

"China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China''s dollar assets," it said.

It also said that the US government has to come to terms with the painful fact that the "good old days" when it could just borrow its way out of messes of its own making are gone.

With the S&P indicating that more credit downgrades may still follow, Xinhua said "if no substantial cuts were made to the US gigantic military expenditure and bloated social welfare costs, the downgrade would prove to be only a prelude to more devastating credit rating cuts, which will further roil the global financial markets all along the way".

PTI