China criticizes US for debt limit and accuses Washington of sabotage
(Bloomberg) – China invoked the US’s brink of war policy over its own debt limit as it responded to Treasury Secretary Janet Yellen’s criticism of its handling of developing countries’ debt problems. development of Beijing.
Most read from Bloomberg
The criticism came from China’s embassy in Lusaka, Zambia, on Monday, criticizing the US for its “catastrophic debt problem” and accusing it of “undermining” efforts to tackle nations’ debt problems. is different.
Noting that the Treasury Department began taking extraordinary measures to meet its obligations after the U.S. government reached its borrowing limit, the embassy said “the largest contribution the United States has One thing that can be done about the external debt problem is to act on responsible monetary policies, deal with one’s own debt problem, and stop undermining the active efforts of other sovereign states to solve their debt problem.”
The sharp words contrast with the recent easing of tensions between China and the United States, which began in November after the two countries’ leaders met face-to-face for the first time in years. They also followed last week’s talks between Yellen and her counterpart, Liu He, which both sides said were constructive and positive.
Treasury measures give it space for several months before running out of cash. Economists and bond market analysts predict the ceiling will have to be raised sometime in the third quarter to prevent a U.S. payment default, which would take a toll on the economy. the world’s largest economy and the global financial system.
The Republicans who control the House intend to use the debt ceiling term as leverage to cash in on deep spending cuts from the White House and Democrats in Congress. President Joe Biden’s view is that the credit of the United States is too important to be bargained for.
According to the latest figures for November, China owes the United States about $870 billion, down from more than $1.3 trillion at the end of 2013. China’s stockpiles – the largest after Japan – have fallen this month. third in a row, hitting its lowest level since June 2010.
China has become the world’s largest creditor to developing countries, some of which are facing a growing debt crisis. The group of 20 countries has established the so-called Common Framework to bring the Paris Club of traditionally rich countries as debtors along with China to try to restructure the debts of low-income countries across the world. on a case-by-case basis.
China has been criticized for its lack of participation in global efforts to reduce debt burdens for developing countries, with Yellen repeatedly saying that Beijing has become the biggest obstacle to economic growth. improvement.
She repeated her call on Monday in Zambia, Africa’s first sovereign nation in the pandemic era, in 2020, and since then, she has struggled to ameliorate the country’s debt. in addition to $17 billion, more than a third of which is held by Chinese creditors.
“Assuming Secretary Yellen’s claims about debt are correct, the best outlook for debt problems outside of the United States would be for the U.S. Treasury Department to address the United States’ own domestic debt problem, based on her level of understanding of the facts, her professional competence, and her team’s performance. possibility,” said the Chinese embassy in Lusaka.
For the United States, its toughest debt-ceiling struggle came in 2011, when S&P Global Ratings was alarmed enough to downgrade the country’s rating from AAA. The move roiled markets and ultimately damaged consumer confidence, hurting the economic recovery from the credit crunch.
At the time, China’s state-run news agency Xinhua criticized the US’s handling of the debt situation, calling Washington’s political crater policy “dangerously irresponsible”.
The rare scathing criticism directed at Yellen this week has cast a shadow over hopes that China may be pivoting away from its so-called Wolf Warriors approach due to the transfer of a senior diplomat from the United States to the United States. closely related to the more confrontational transformation of the State Department in recent years.
–With support from Christopher Anstey.
Most read from Bloomberg Businessweek
©2023 Bloomberg LP