China official media:U.S. woes threaten global recovery
Reuters US Online Report Business News
Aug 07, 2011 20:29 EDT
BEIJING (Reuters) - The United States and Europe must summon the political courage to overcome their debt crises or global economic recovery will be threatened, Chinese official media said on Monday, warning Washington against letting the dollar weaken.
A 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 the Western democracies.
"It must be understood 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.
"People have deepening misgivings about the political decisiveness of the Western nations, and this has also seriously hurt global investors' confidence in world economic recovery, exacerbating market turmoil," it said.
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 decried the potential damage to China's growth and huge holdings of U.S. treasury assets.
Such media comments do not amount to a definitive response from China's top leaders, who make tread a more careful public line. But they lay bare the economic and political pressures weighing on policy-makers deciding how to handle China's huge holdings of dollar-denominated assets.
WARNING ON EXPORTS
The official Xinhua news agency warned Washington against seeking to boost exports and growth by letting the dollar weaken, a move that would lower the value of Beijing's vast holdings of U.S. dollar assets.
Owner of the world's largest foreign exchange reserves at $3.2 trillion, China is also the biggest foreign buyer of the U.S. Treasuries. Analysts estimate about 70 percent of its reserves are invested in dollar assets, including Treasuries, although the exact investment mix has not been disclosed.
"From this point, the U.S. has every motive to maintain a weak dollar," said an English-language commentary from Xinhua.
"Before the U.S. makes any move, please remind it: don't forget your responsibility as the issuer of reserve currency to maintain the stable value of the dollar."
A weaker dollar could impede global economic recovery by stoking turmoil in financial markets and lifting the prices of dollar-denominated commodities.
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.
"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."
On Monday, the Australian Treasurer Wayne Swan criticized China over its media critisism of U.S. "debt addiction," calling Beijing's comments unhelpful.
The Chinese 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)
Source: Reuters US Online Report Business News