Xinhua republished an article originally from Huaxi Metropolitan Daily, a Sichuan based newspaper, that discussed turning the U.S. debt crisis into China’s opportunity. The article stated, “At present, it appears (China) will be subject to loss no matter what currency it has. In this situation, when the American dollar, the euro, the British pound, and the Japanese yen all are depreciating, the most important thing for China is to promote internationalization of the Chinese renminbi. To decrease China’s loss, the active administration of foreign currency reserves is no longer the best solution. Only by pushing the renminbi out may (China) find a better solution.”

“There is no doubt that the problem of the U.S. sovereign debt is a crisis, but it may also be transformed into an opportunity. The sub-prime loan crisis that happened on American soil has shaken the financial system that has the U.S. dollar as its core. The current downgrade of the credit rating of the U.S. debt has further loosened the dollar’s credit. With expected future depreciation, many international enterprises that export goods to the U.S. will inevitably turn to other alternative currencies for settlement. Investors are also gradually investing in other currencies for better gains. Due to the U.S. debt crisis, the Japanese debt crisis, and the soft euro, more and more countries have also expressed the desire to reform the international currency system and have the right to more freedom in choosing the international reserve currency. All these have provided opportunities and conditions for the internationalization of renminbi.”

Source: Xinhua, August 8, 2011
http://news.xinhuanet.com/comments/2011-08/08/c_121826284.htm

A Guangming Daily commentary article, titled “Why the U.S. Government Is Not Reliable,” harshly criticizes the American capitalist system. The article ascribes blame for the U.S. debt and credit crisis to the crisis of the American capitalist system and states that the “American train” has been on the wrong track for a long ago. It says, “It is time for the U.S. government, the parties, and politicians in Congress to wake up. You political elites representing one percent of American rich people should have the courage to take the blame for the system’s failure and do some deep self-reflection and self-examination."

The article concludes by saying, “To the people of the U.S., the American dream is a myth — a myth in which one percent of the rich people cheat all the ordinary civilians. To the people of the world, the American political system and currency system are also a myth — one in which the White House cheats the whole world. The American people and the people of the whole world have been kidnapped by the American dream and the American capitalist system. American capitalism has not only lost its stature, but also its moral ground.”

Source: Guangming Daily, August, 11, 2011
http://news.xinhuanet.com/comments/2011-08/11/c_121843514.htm

Money Weekly published a piece stating that China must increase domestic demand by reducing taxes and fostering competition. He Wannan, a financial analyst on publicly traded companies, wrote an article titled, “Why does China feel the pain whenever the United States hurts?” The article states that, as the largest holder of U.S. debt, each of the 1.3 billion people in China has loaned $900 to the United States, the wealthiest country in the world. China has $US3 trillion in foreign exchange reserves in U.S. dollars and has nowhere to invest it. A small move would cause a market slide. “Why does China feel the pain whenever the United States hurts? Fundamentally, it is because in China’s rise, it has followed the path of an export oriented economy, with over one-third of GDP generated by demand from outside of China. … In a word, China must focus on domestic demand. Two critical factors are involved in reaching the goal: one is to reduce taxes and the other is to oppose (state) monopolies and foster competition."

Source: Money Weekly reprinted at jrj.com August 9, 2011
http://finance.jrj.com.cn/people/2011/08/09160610687375.shtml

Qiushi, a journal of the Central Committee of the Chinese Communist Party, published an article on August 8, 2011, titled “Be Alert to Possible U.S. Pressure to Depreciate the Chinese Yuan.” The article is based on the words of Hong Kong’s famous economist, Prof. Lang Xianping. “According to Lang’s friend who is in a U.S. economic decision-making group, the U.S. is developing a major strategy to suppress and devalue the Chinese yuan.”

Recalling how the U.S. forced Japan and the “Four Little Dragons” (Taiwan, South Korea, Hong Kong, and Singapore) to appreciate their currencies first and then devalue their currencies by selling their real estate and stock, the author accused the U.S. of “looting the fruits of economic development” of these countries. The article states, “China’s local governments have over 10 trillion (yuan) in debt. China’s real estate market bubble and high inflation result in the yuan appreciating outside of China and the yuan depreciating inside China, which is obviously contrary to the laws of the market. The laws of the market are irresistible. This is precisely the reason why the United States may devalue the Chinese yuan.” At the end of the article, the writer expressed the belief that China will have the wisdom to deal with the possible pressure from the U.S. and Western countries to depreciate the yuan.

Sorce: Qiushi Journal, August 9, 2011
http://www.qstheory.cn/lg/rpzm/jj/201108/t20110808_100458.htm

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
http://world.huanqiu.com/roll/2011-08/1887738.html