We Have Merely Made the Fuse On Our National Debt Bomb One Inch Longer

China, sitting on the world’s biggest foreign exchange reserves of around $3.20 trillion as of the end of June, is the largest holder of US Treasuries. — Photo by AP

BEIJING: China warned Wednesday that tortured efforts to raise the US debt ceiling had failed to defuse Washington’s “debt bomb”, and that it would further diversify its currency holdings away from the dollar.

US President Barack Obama finally signed an emergency austerity bill on Tuesday that averted what would have been a catastrophic debt default for the world’s biggest economy.

But a failure to rein in US borrowing could “jeopardise the well-being of hundreds of millions of families within and beyond the US borders”, the official Xinhua news agency said in a blistering commentary on the deal.

“The months-long tug of war between Democrats and Republicans…failed to defuse Washington’s debt bomb for good, only delaying an immediate detonation by making the fuse an inch longer,” the commentary said.

“Meanwhile, the madcap farce of brinkmanship has disclosed yet another ticking bomb in the heartland of the sole superpower in the world — the crippling tendency to politicise the economics while trivialising the politics.”

China, sitting on the world’s biggest foreign exchange reserves of around $3.20 trillion as of the end of June, is the largest holder of US Treasuries.

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