10/16/2013, 00.00
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Beijing worried about collapse of U.S. economy

by Wang Zhicheng
Tomorrow is the deadline for raising the debt ceiling in the United States, which could touch 16.7 trillion dollars. The U.S. is likely to be unable to pay its debts and to ensure the value of its currency. Beijing holds U.S. Treasury bonds to the tune of 1280 billion. The Beijing Global Times calls for a "de-Americanization" of the world economy and a currency of reference to supplant the dollar.

Beijing (AsiaNews) - The possibility of a collapse of the U.S. economy worries the Chinese leadership to the point that for days it has been sending messages to the U.S. Congress to raise the debt ceiling .

Republicans and Democrats are struggling to raise the ceiling of 16.7 trillion U.S. dollars , which makes the United States the most indebted nation in the world. If by tomorrow Congress does not raise this limit, the state becomes unable to pay its debts and to ensure the value of its currency . This would wreak havoc among global investors and among the creditors of the U.S. Treasury , which include China.

Beijing possesses 23% of U.S. Treasury foreign bonds, about 1280 billion of a total 3660 billion of foreign currency reserves . Such a large exposure to the U.S. debt has often been criticized by people online. But Li Jie , head of the Central University for economics and finance, says that there are many other markets to differentiate Chinese investment . "Europeans treasuries a good potential - he says - but not now."

Fears of seeing Beijing's reserves collapse along with the dollar has led several prominent government members to suggest in recent days raising the U.S. debt ceiling , in contravention of an important principle of China's foreign policy , according to which it should not intrude in the internal affairs of other countries.

Last week, in Brunei, Premier Li Keqiang expressed concern over the issue of U.S. debt in his meeting with U.S. Secretary of State John Kerry. Two days ago, the Deputy Finance Minister Zhu Guangyao said that " The United States must deal with the tax deadlock, raise the debt ceiling soon and keep the promise not to [ lead to] the collapse of its treasury bonds... to avoid dragging the global economy down. "

An editorial in the Global Times - the People's Daily magazine -dating to October 13, speaks in stronger terms, calling upon the world to build " a de- Americanized world order." " Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing. " According to the Global Times, it's time to think about a new international currency to replace the dollar .

For a long  - and especially the International Monetary Fund (IMF ) - the idea of replacing the dollar as the reference currency with a " basket " of alternative currencies or even with a single currency .

Meanwhile , at the IMF meetings last week in Washington, Japan and Chile also championed the cause of raising the U.S. debt ceiling.


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See also
China and U.S. breathe sigh of relief: economy more important than human rights
Chinese yuan set to replace dollar
Asian markets plummet after Republican say no to Boehner plan
U.S. debt approaches insolvency; Chinese currency reserves at risk
China is in good shape, but must not underestimate the global crisis


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