For China, US “failed to defuse” debt bomb
Beijing, Moscow and Asian exchanges give the thumbs down to US decision to raise its debt ceiling yesterday. The governor of China’s central bank has doubts about US economic stability. Asian markets lose 2 per cent. Putin calls the US a “parasite” living “beyond its means.”
Beijing (AsiaNews) – Legislation to raise US debt ceiling has “failed to defuse Washington’s debt bomb for good”, which could “jeopardise the well-being of hundreds of millions of families within and beyond the US borders”, Chinese media said. In responding to the US Senate’s vote authorising a higher debt ceiling, China did not hold back. Chinese officials in fact remain unconvinced of the stability of the US economy and will continue to diversify its foreign currency investments.
US President Barack Obama signed the legislation raising the debt ceiling, voted by Congress, thus averting a technical default; however, he failed to allay fears among investors and world exchanges. A bipartisan House-Senate committee is now charged with producing up to US$ 1.5 trillion cuts over the next few months.
Xinhua, the Chinese Communist Party’s new agency, expressed China’s reaction. “China's foreign exchange reserves will continue following the principle of diversified investment, enhancing risk management,” People's Bank of China governor Zhou Xiaochuan said in a statement. “Large fluctuations and uncertainty in the US treasury bond market will affect the stability of international monetary and financial systems, which will hurt global economic recovery,” he added.
Russian Prime Minister Vladimir Putin was openly scathing. He accused the United States of living beyond its means "like a parasite" on the global economy and said that the dollar dominance was a threat to the financial markets. "Thank god," Putin added, "that they had enough common sense and responsibility to make a balanced decision.”
Still, financial markets are not convinced. This morning, shares were down in Asia by 2 per cent, except in China, where they stayed the course thanks to gold. Now, investors in Asia fear that US belt-tightening will cull the weak economic recovery.
"I think the conditions have completely changed this week," said Koichi Ono from Daiwa Securities Capital Markets in Tokyo. “Until last week, people have been saying the US debt ceiling was the problem. Now they talk about worries about the health of the economy."
In fact, Australian shares fell 2 per cent, whilst South Korean stocks declined more than 2.5 per cent. Taiwan and Singapore were also down.
In Hong Kong, exporters saw their share value drop significantly. Cosco Pacific and Li & Fung Ltd, who run distribution for US giants Wal-Mart and Target Corp, lost around 4 per cent.
However in Shanghai, the index did not drop thanks to gold, which reached new heights, as investors shift to safer investments.
US President Barack Obama signed the legislation raising the debt ceiling, voted by Congress, thus averting a technical default; however, he failed to allay fears among investors and world exchanges. A bipartisan House-Senate committee is now charged with producing up to US$ 1.5 trillion cuts over the next few months.
Xinhua, the Chinese Communist Party’s new agency, expressed China’s reaction. “China's foreign exchange reserves will continue following the principle of diversified investment, enhancing risk management,” People's Bank of China governor Zhou Xiaochuan said in a statement. “Large fluctuations and uncertainty in the US treasury bond market will affect the stability of international monetary and financial systems, which will hurt global economic recovery,” he added.
Russian Prime Minister Vladimir Putin was openly scathing. He accused the United States of living beyond its means "like a parasite" on the global economy and said that the dollar dominance was a threat to the financial markets. "Thank god," Putin added, "that they had enough common sense and responsibility to make a balanced decision.”
Still, financial markets are not convinced. This morning, shares were down in Asia by 2 per cent, except in China, where they stayed the course thanks to gold. Now, investors in Asia fear that US belt-tightening will cull the weak economic recovery.
"I think the conditions have completely changed this week," said Koichi Ono from Daiwa Securities Capital Markets in Tokyo. “Until last week, people have been saying the US debt ceiling was the problem. Now they talk about worries about the health of the economy."
In fact, Australian shares fell 2 per cent, whilst South Korean stocks declined more than 2.5 per cent. Taiwan and Singapore were also down.
In Hong Kong, exporters saw their share value drop significantly. Cosco Pacific and Li & Fung Ltd, who run distribution for US giants Wal-Mart and Target Corp, lost around 4 per cent.
However in Shanghai, the index did not drop thanks to gold, which reached new heights, as investors shift to safer investments.
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