The US must ease Beijing’s worries about its vast US debt holdings, China’s official media said yesterday ahead of a visit by US Vice President Joe Biden, warning that mishandling ties would lead to a “roller-coaster ride” that would sap global confidence.
Commentaries in the domestic and overseas editions of the People’s Daily, the official newspaper of the Chinese Communist Party, spelled out Beijing’s chief concerns ahead of Biden’s arrival in Beijing yesterday evening.
China wants Biden to reinforce US assurances that its holdings of US dollar assets and US Treasury bonds remain safe, despite Standard & Poor’s (S&P) recent downgrade of the US’ long-term credit outlook, the paper said.
“China, as the biggest foreign creditor of the United States and the largest foreign holder of dollar assets, is naturally more concerned about US policies than others,” a commentary in the overseas edition of the People’s Daily said.
An English-language commentary from Xinhua news agency amplified that point.
“Biden is expected to assure Chinese leaders of Washington’s capacity, will and commitment to tackle its fiscal and economic challenges,” Xinhua said.
“What Washington should do is shoulder the global responsibility befitting an economic giant,” it said, also urging the US to “carry out responsible and effective measures to cure its debt addiction.”
Since S&P cut its credit rating for long-term US debt early this month, Chinese state media have accused Washington of reckless fiscal policies that have created uncertainty about Beijing’s big holdings of US dollar assets.
“Although there’s lots of reassuring going on, real relief appears nowhere in sight,” the Xinhua commentary said.
Analysts estimate Beijing has put about two-thirds of its US$3.2 trillion foreign exchange reserves, the world’s largest, in US dollars and is the US’ biggest foreign creditor.