China welcomes US debt deal as Xinhua condemns bickering

BEIJING (AFP) - China on Thursday welcomed the resolution of the US debt ceiling deadlock, saying it will contribute to global economic stability, but Beijing's official news agency poured scorn on Washington's politicians.

"The US is the largest economy in the world and the proper resolution of this issue serves not only its own interest but also world economic stability and development," foreign ministry spokesman Hua Chunying told reporters in a regular press briefing.

"We welcome the progress in resolving the issue."

Her comments came shortly after China's official news agency Xinhua said in a bylined commentary that despite the deal, "such move of passing a transient bill was no more than prolonging the fuse of the US debt bomb one inch longer".

The last-gasp plan by Congress staves off the most pressing crisis by extending the US Treasury's borrowing authority until February 7. Lawmakers also reached agreement on funding government through January 15.

But the deal has "done nothing substantial but postponing once again the final bankruptcy of global confidence in the US financial system and the intactness of dollar investment", the commentary argued.

The soundness of that investment in the US, the commentary continued, "has already been seriously shattered by the undying partisan struggle and the country's attested inability to fix its fiscal problems once and for all".

The commentary was written by Liu Chang, who raised eyebrows a few days earlier with another commentary urging the building of "a de-Americanised world".

In a separate bylined commentary Thursday released barely an hour after President Barack Obama signed the deal to raise the debt ceiling and end the US federal shutdown, another Xinhua writer charged that US politicians had held the rest of the world hostage in the crisis.

"The founding fathers of the United States of America created Congress for the sake of balance of power," it said.

"They would turn in their graves if they saw their design being kidnapped for political brinkmanship."

"Although they clearly knew the dire consequences of a default on the US economy and the rest of the world, the Democrats and Republicans played brinkmanship into the final moment for the sake of partisan interests."

The government shutdown, the narrowly-averted threat of default and the horse-trading surrounding the situation showed that "Congress itself has become the problem", it said.

China is a one-party state where the Communist authorities retain an iron grip on power, regularly ruling out any move towards Western-style democratic politics.

"With the world economy struggling in crisis, politicians at Capitol Hill seem to be too much engaged in political wrangling to remember their country's responsibilities as the world's largest economy, and, as they say, the world leader in other fields," the Xinhua commentary said.

"Brinkmanship of this kind means US domestic politics is holding the whole world hostage."

China has the world's largest foreign exchange reserves, most of them held in dollars, and is the largest foreign holder of US Treasury bills, with US$1.28 trillion according to the latest available figures from Washington.

"The saga in Washington is teaching America's creditors a lesson: US politicians are ready to fight each other at the expense of debt-holders' interests," the commentary said.

"US Treasury bonds may no longer be safe investment," it added, advising "domestic or foreign" investors "to make plan B".

"At the same time, Uncle Sam is strongly advised to drop this dangerous game of political brinkmanship to win back confidence if it wants to maintain its role as the world leader," it said.

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