China: Asian Exporters Biggest Victims of US DowngradeWorld | August 7, 2011, Sunday // 17:03| views
File photo by CNN
China's top newspaper on Sunday warned that Asian exporters will be dealt the hardest blow by US economic problems after Standard and Poor's downgraded the country's sovereign credit rating.
"The lowering of the United States' long-term sovereign credit rating has sounded a warning bell for the international currency system dominated by the U.S. dollar," economist Sun Lijian wrote in the Sunday's edition of the People's Daily, a mouthpiece of China's ruling Communist Party.
The United States government may not be able to recover its top-grade credit score if its deficit continues to grow, Sun wrote in a brief commentary about the move.
"Yet the biggest victims may not be the United States itself, but other countries that have depended on external demand to amass national wealth -- be they Asian nations that depend on exporting goods or nations in Latin America and the Middle East, as well as Russia, that depend on exporting resources," he wrote, referring to the world's biggest foreign holder of U.S. Treasuries.
"They all face the risk that the US treasury debt that they hold will plunge in value, leading to a deterioration in liquidity," wrote Sun.
Such comments, like a commentary from the Xinhua news agency on Saturday, do not reflect the official position of the government, but are believed to reflect warnings from policy advisers.
Many exporters depend on American consumer spending for orders, and the US trade deficit with China hit a record USD 273 billion in 2010.
On Saturday, Xinhua condemned the United States for its "debt addiction" and "short sighted" wrangling and called for a new global reserve currency.
“China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets,” Xinhua said.
The news agency typically reflects the view of China’s collective top Communist Party leadership and sets the editorial line for the rest of the state-controlled media to follow.
“The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appear to be numbered,” the editorial said. “The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone.”
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