As the U.S. Congress and Obama Administration are engaged in a protracted and bitter battle over the federal budget and debt ceiling, China, the United States’ largest creditor, is also getting involved. From the New York Times:
U.S. policy makers are locked in tense negotiations over the government debt limit, which the Obama administration says must be raised from its current level of $14.29 trillion to allow the government to pay its daily bills and service any debt coming due. Any failure to pay debt coming due would effectively amount to a default, which, however brief, could shake confidence in the U.S. economy and severely unsettle global financial markets.
[…] The authorities in Beijing added their voice of concern Thursday — albeit in more muted terms.
“We hope that the U.S. government adopts responsible policies and measures to guarantee the interests of investors,” Reuters quoted a foreign ministry spokesman, Hong Lei, as saying. Mr. Hong was speaking at a regular news briefing in Beijing, and was responding to questions about the Moody’s report.
The comments echoed those made by officials in Beijing in April, when Standard & Poor’s, another leading credit rating agency, lowered its outlook on the United States from stable to negative because of the country’s high budget deficit and rising government indebtedness.
