The decision by Standard & Poor’s to downgrade the sovereign rating of the United States has provoked outrage of Beijing, and the comments from China, made through the official press, sounds like a lesson in capitalism to its rival and partner.
China on Saturday urged Washington to tighten the belt and end its “addiction to debt”, according to Xinhua news agency. “The U.S. government has to accept the painful fact that the good old days when it could just borrow out of the trouble had gone, they are gone, never to return.”
Xinhua said the downgrade by S & P could be followed by further “devastating” risk and global financial turmoil if the U.S. does not learn to “live within its means”. “China, the largest creditor of the only great power in the world, has every right to ask the U.S. to address their structural problems of debt and ensure the safety of Chinese assets in dollars,” said Xinhua Press.
Beijing hit directly in the heart of American politics. It said the world needs a new stable global reserve currency to prevent a disaster caused by a single country and urged Washington to implement cuts in swollen social security costs and its huge military spending.
Last month, the highest ranking general in the country, Chen Bingde, also linked American financial difficulties with its military budget.
Such comments reflect Beijing’s desire that Washington reduce its military presence in Asia. United States regularly criticizes China for the continued strengthening of its army, which the authorities of China often respond that its military spending represents about 1.4% of GDP, while the figure in the U.S. is about 4%, and India, Britain and France, more than 2%.
Many politicians in Washington and other countries have shifted their concern over the rising Chinese and increasingly steely words of its top officials, Chinese leaders are increasingly confident, and the speed with which the country began to emerge from the global crisis as uncertainty swept Europe and the United States has reinforced this attitude. China has gone from recommendations and gives other countries tips on capitalism.
In 2010 China overtook Japan and became the second largest economy in the world, not only left behind the historic rival in Asia, which maintains a difficult relationship because of the conflict in the past, but stepped in the cherished goal that one day the Asian giant overtakes the United States and become the first of world power. It is a stated goal, especially when per capita income in China is still far behind the leading group (China takes place around 90th in the world rankings). But the continuing economic and political rise of the world’s most populous country has made it clear to foreign governments and analysts that the geopolitical balance in the world has shifted inexorably towards Asia, where China’s role is the protagonist.
Beijing is primarily intended to protect their financial interests. It has foreign exchange reserves of 3.2 billion, of which two thirds are in the greenback. Of these, 1.2 billion are invested in Treasury debt. “The growing debt and ridiculous political battles in Washington have damaged America’s image abroad,” Xinhua said.
People’s Daily, the official organ of the Chinese Communist Party (CCP) – yesterday stepped up criticism of United States. It said the downgrade of U.S. debt by S & P “has sounded alarm bells about the system of international currencies dominated by the dollar,” and warned that the most affected by the decision of the rating agency risk could be economies exporting processed products, such as China, or selling natural resources, such as some Latin American countries.