FINANCIAL
TIMES: China and Japan warn US on default
China and Japan ratcheted up
pressure on the US to avoid an unprecedented US default on its debt as
Democrats and Republicans continued their stand-off over the budget in
the second week of a US government shutdown.
Two senior White House economic
officials said on Monday that President
Barack Obama would not back down from
his refusal to negotiate with Republicans in Congress, increasing worries
that the debt ceiling limit would be reached on October 17 without an
agreement, raising the threat of a default.
More
ON THIS STORY
· Editorial Default
is defeat for Republicans
ON THIS TOPIC
· Chris Giles Central
bankers call for US default deal
· Global Market Overview Hopes
of US debt deal support stocks
IN US POLITICS & POLICY
In its first official reaction to
the US political stalemate over the budget and looming debt ceiling deadline
later this month, Beijing said “the clock is ticking” and urged politicians
in Washington to “ensure the safety of the Chinese investments”.
Zhu Guangyao, vice-finance
minister, told a media briefing that China has made clear its unease over the
political impasse in Washington. In Japan, the Ministry of Finance is very
worried about the potential impact on , according to a senior official. A US
default could cause to dump the US dollar, which would sharply push up the
value of the yen.
On Tuesday Japan’s finance
minister Taro Aso called on “the United States to resolve its debt ceiling
stand-off without delay”.
The absolute value of US bonds
held by the Japanese government could decline if the situation was not
brought to a swift end, he added.
House Republican leaders have
maintained a hardline in the current budget battle. John
Boehner, the Republican speaker of the House of Representatives,
declared on Sunday it was “time for us to stand and fight” over the US
budget.
Mr Boehner said the Republican
majority in the House would not pass bills to fund the government or increase
the debt ceiling unless the Obama administration was willing to make
concessions on healthcare and other issues.
Gene Sperling, the chairman of
the White House’s National Economic Council, indicated the administration
might consider a short-term lift of the debt ceiling, adding that it was up
to Congress to decide the duration of any increase.
The rhetoric from US politicians
rattled China, with Mr Zhu noting that “the US has a large amount of direct
investment in China, and China has a vast number of US . . . The US is
clearly aware of China’s concerns about the financial stalemate [in
Washington] and China’s request for the US to ensure the safety of Chinese
investments.”
China held $1.28tn in US
Treasuries in July 2013, according to US Treasury data, although the true
figure could well be higher than this as China also invests through
intermediaries. Advisers to the People’s Bank of China, the central bank,
have been urging the authorities to diversify the holdings.
TheUS is clearly aware of China’s concerns about the financial stalemate [in Washington] and China’s request for the US to ensure the safety of Chinese investments
- Zhu Guangyao, vice-finance minister
Later this week, Li Keqiang, the
Chinese premier, will embark on a three-nation tour of southeast Asia. Coming
just after President Xi Jinping’s high-profile visit to Indonesia and Mr
Obama’s decision to pull out of the Apec summit in Bali, Mr Li’s tour of Brunei,
Thailand and Vietnam will reinforce China’s growing engagement with the
region.
Mr Zhu said Mr Obama’s absence
from this week’s summit was “something that all other parties didn’t want to
see [happen]”.
“We hope that the US can draw
lessons from history,” Mr Zhu added, noting that a last-minute agreement over
the debt ceiling in August 2011 still triggered a downgrade of America’s
triple A rating by Standard & Poor’s.
“As the world’s largest economy
and an issuer of the world’s major reserve currency, it is important that the
US take credible steps to address its dispute over the debt ceiling in a
timely fashion and avoid a default.”
Other bankers and traders in Asia
were sanguine about the threat of a US default with several people saying the
drama playing out on Capitol Hill was “just political theatre”, or in the
words of another, a US default “just ain’t gonna happen”.
“The prevailing view in the
market is that someone in Washington will blink and this will all blow over,”
said a third banker.
|
Sunday, October 13, 2013
FINANCIAL TIMES: China and Japan warn US on default
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment