Tue, Aug 09, 2011 - Page 1 News List

US gives Taiwan assurances on Biden China trip

WAR BY OTHER MEANS:An editorial in the ‘People’s Daily’ criticized the US for ignoring core key Chinese interests and discussed how that might be changed

By Shih Hsiu-chuan  /  Staff Reporter

Stopping or massively reducing US Treasury bond purchases would cause China to incur a certain degree of pain, Ding said, but China must try to minimize the loss and seek to be more active in dealing with the situation.

China should consider how it can establish a direct link between US Treasury bond purchases and US domestic politics, while adopting measures to gradually adjust the structure of China’s foreign exchange reserves, he said.

“For example, China could directly link the amount of US Treasury holdings with US arms sales to Taiwan and require international credit rating agencies to demote US Treasuries to force the US to raise interest rates. China could also launch limited trade sanctions against the states of those US Congress members who vigorously advocate arms sales to Taiwan to impact employment in those areas,” Ding wrote.

Ding said China was not willing to arbitrarily use US Treasury holdings as a weapon.

“However, China has no choice but to use it as a weapon to defend itself when facing threats to Chinese sovereignty,” he wrote.

State-run media yesterday also argued that the US should rethink its huge military outlays, big footprint abroad and summon the courage to defuse debt woes.

Commentaries said that the economic troubles facing the US and EU grew out of the basic political dysfunctions of Western democracies and their unsustainable appetite for spending.

Xinhua news agency also linked the weekend US debt downgrade to another Chinese complaint: US military spending, which Beijing sees as aimed at frustrating China’s rise.

“Since the collapse of the Soviet Union, the United States, as the world’s sole superpower, has relied on its powerful military to meddle everywhere in international affairs, advancing hegemonism and paying no heed to whether the economy can support this,” said a commentary issued by Xinhua, which noted the heavy bills for wars in Iraq and Afghanistan.

“Now is the right time for the United States, trapped in economic hardship, to reflect on its -domineering thinking and deeds,” Xinhua said, urging Washington to “change its policies of interference abroad.”

Such media comments do not amount to a definitive response from China’s top leaders, who are likely to tread a more careful public line, knowing that their comments could stoke market alarm and a political backlash in the US.

Officials have been mute about the blow to Washington after Standard and Poor’s stripped the US of its top-tier “AAA” credit rating. However, media have decried the potential damage to China’s economic growth and huge holdings of US treasury assets.

Additional reporting by Reuters

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