CHINA WARNS US ‘CLOCK TICKING’ ON DEPT CEILING
Beijing, 3 Dul hijjah 1434/8 October 2013 (MINA) – China has warned the US that the prospect of Washington’s first ever default over the debt-ceiling deadline could seriously harm Chinese economic interests.
In a Monday press conference, China’s Vice Finance Minister Zhu Guangyao said “the clock is ticking” and politicians in Washington should “ensure the safety of the Chinese investments”. “As the world’s largest economy and the issuer of the major reserve currency in the world, it is important for the US to maintain the creditworthiness of its Treasury bonds,” Guangyao said.
The Chinese official said China has made clear its unease with the political impasse in Washington with the US government¸ which is in a partial shutdown due to a dispute between Republicans and Democrats on spending legislation.
“The US has a large amount of direct investment in China and China has a vast number of US Treasury bonds….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.
” The US government shutdown has entered its seventh day with little sign of an immediate resolution, while an even more serious problem of the debt-ceiling looms. Washington will not have enough cash to pay its bills if an agreement to raise its debt ceiling is not reached by October 17.
The forced shut down came after Republican-led House of Representatives refused to approve money for government operations. The lawmakers demanded that the administration should first delay Obama’s new health care law known as the Obamacare.
China held $1.28 trillion 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, Press TV quoted by Mi’raj News Agency (MINA) as reporting.
The United States public debt is the amount owed at any point of time by the federal government of the United States. The measure of the public debt is the value of the Treasury securities that have been issued by the Treasury and other federal government agencies and which are outstanding at that point of time. There are two types of United States Treasury securities on issue:
Debt held by government accounts or intragovernmental debt, such as non-marketable Treasury securities held in accounts administered by the federal government that are owed to program beneficiaries, such as the Social Security Trust Fund. Debt held by government accounts represents the cumulative surpluses, including interest earnings, of these accounts that have been invested in Treasury securities.
Public debt increases as a result of government spending and decreases as a result of government tax or other receipts.
Historically, the US public debt as a share of GDP increased during wars and recessions, and subsequently declined. For example, debt held by the public as a share of GDP peaked just after World War II (113% of GDP in 1945), but then fell over the following 30 years. In recent decades, however, large budget deficits and the resulting increases in debt have led to concern about the long-term sustainability of the federal government’s fiscal policies.
On April 2, 2013, debt held by the public was approximately $11.959 trillion or about 75% of GDP. Intragovernmental holdings stood at $4.846 trillion, giving a combined total public debt of $16.805 trillion. As of January 2013, $5.6 trillion or approximately 47% of the debt held by the public was owned by foreign investors, the largest of which were the People’s Republic of China and Japan at just over $1.1 trillion .(T/P04/E1).
Mi’raj News Agency (MINA)
