Tags: china | paper | us | failings | debt

China State Paper Says U.S. Failings Threaten Global Recovery

Sunday, 07 Aug 2011 07:46 PM

BEIJING, Aug 8 (Reuters) - The United States and Europe must summon the political will to overcome their debt crises or global economic recovery will be threatened, China's top official newspaper said on Monday, amplifying Beijing's drum beat of warnings to the West.

The commentary in the People's Daily newspaper, the chief mouthpiece of China's ruling Communist Party, said the troubles facing the United States and European Union grew out of the political dysfunctions of Western democracies.

"It must be seen that if the U.S., Europe and other advanced economies fail to shoulder their responsibility and continue their incessant messing around over selfish interests, this will seriously impede stable development of the global economy," the paper said.

"Only if the Western nations stop wantonly shirking responsibility and take out a sharp blade of determination and courage to cut through their fetters, strengthening policy coordination with developing countries, then the global economy has hopes of taking a path of stable recovery."

Beijing officials have so far been publicly mute about the blow to Washington after Standard and Poor's stripped the United States of its top-tier AAA credit rating on Friday. But state-run media have issued bleak warnings about the potential damage to China's growth and huge holdings of U.S. treasury assets.

Such comments do not amount to a definitive response from the government. But they echo warnings from policy advisers that Beijing must accelerate the diversification of its holdings.

Beijing has urged Washington to protect China's dollar investments, estimated to total about two-thirds of its $3.2 trillion in foreign exchange reserves, the world's largest.

The People's Daily commentary said the recent turmoil was driven by Washington politics, not economic fundamentals.

"What has been pushed to the edge of the precipice is not the global economy, but Washington politics," said the commentator, writing under a pen name "Zhong Sheng", which means the "voice of China." That pen name of sometimes used for commentaries reflecting higher level opinion.

"Washington has fallen into a political mire, not an economic one," said the paper. "In essence, what occurred in Washington was not an economic crisis, but a political one."

The Foreign Ministry, central bank and other government agencies have made no public comment on the U.S. debt downgrade and have not answered faxed questions. Top officials are likely to remain cautious about making any remarks that could undermine the value of China's dollar-held assets. (Reporting by Chris Buckley; Editing by Ron Popeski)

© 2015 Thomson/Reuters. All rights reserved.

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