BEIJING (MNI) – The official mouthpiece of the Chinese government
launched another strongly-worded broadside at Washington Wednesday,
warning that the last-minute bipartisan agreement to raise the debt
ceiling and avert a possible global economic crisis has failed to defuse
the U.S. “debt bomb.”

The Xinhua News Agency said in an English-language editorial that
the “madcap farce” of the negotiations between Republicans and Democrats
in recent weeks highlighted Washington’s “crippling tendency to
politicize the economics while trivializing the politics.”

The final agreement has “failed to defuse Washington’s debt bomb
for good, only delaying an immediate detonation by making the fuse an
inch longer,” said the editorial, which was written by Deng Yushan.

The editorial warned the U.S. dent level is nearing 100% of its GDP
and called for more effective measures to balance the budget and return
its economy — and the world’s — to health.

If Washington fails to address its debt problem, “its already
tarnished credibility will lose more luster, which might eventually
detonate the debt bomb and jeopardize the well-being of hundreds of
millions of families within and beyond the U.S. borders.”

No Chinese version of the editorial was available. The government
often uses outlets such as Xinhua as its mouthpiece, though it is
unclear whether or not today’s editorial reflects the thinking of the
senior leadership.

Zhou Xiaochuan was more circumspect in comments delivered early on
Wednesday morning. The People’s Bank of China governor welcomed the end
of the deadlock in Washington but continued to urge the U.S government
to ensure the safety of Treasury investments and said that China will
continue to diversify its foreign exchange holdings.

Hours before Zhou’s statement, Moody’s Investors Service reiterated
the U.S. government’s AAA rating but with a negative outlook.

Dagong Global Credit Rating, a ratings agency set up by the
Development Research Center and Chinese Academy of Social Sciences, both
bodies under the State Council, downgraded its U.S. rating to A from A+
with a negative outlook.

beijing@marketnews.com
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