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Huanqiu Article on the Downgrade of the US Credit Rating

Huanqiu published an article on August 9, 2011, about Standard & Poor’s downgrade of the US credit rating, titled “China Cannot Be As Incompetent As the United States.” The article states that the downgrade is due not only to the serious U.S. deficits and debt, but also to its “political crisis.” "The protracted quarrel between the two parties could do nothing to help reach an agreement on the debt ceiling. This system of checks and balances, combined with political self-interest, actually led to the partial dysfunction of the U.S. government." The article pointed out, “The United States does not have any authority who can make a final decision while ignoring all other opinions.”

The article admits that China will certainly suffer losses due to the depreciation of the U.S. dollar and suggests China develop a domestic market in order to reduce China’s holdings of U.S. debt.  “For a long time, China has wanted to reduce its holdings of U.S. debt. However, an important reason why the reduction has not occurred is that China’s export-based economy tenaciously resists any reduction.”

Source: Huanqiu, August 9, 2011