SECRETLY TERRIFIED: China laughs, scolds U.S. for risking default
China could be a major loser is U.S. credit is downgraded.
The Chinese government is wringing its hands and lashing out against the U.S. government as the threat of default looms. A default would hurt China by delaying debt repayments to that country. In an effort to shame American politicians into resolving the crisis, Chinese state media is harshly criticizing the United States.
The Chinese are terrified of a U.S. default which could result in a downgrade. That would do permanent damage to the Chinese economy.
The screed was fired from Chinese state media over the weekend as the threat of a debt default loomed over Washington and Beijing.
The U.S. government is just a few days away from a debt default, which experts are becoming increasingly optimistic will be resolved in the nick of time. A default would mean a delay in debt payments to others countries including China. China relies on influxes of American cash to maintain its own government spending projects.
Any downgrade in the U.S. credit rating would significantly diminish the value of U.S. holdings that China has.
In an effort to avoid a potentially disruptive default, China has fired a tirade of criticism at the United States, daring us to prove them wrong. State media called the "Pax Americanna" a failure and criticized the U.S. government, our treatment of prisoners, and called the United States a "meddler" in international affairs.
An editorial had these words for us, "As US politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world."
The Xinhua News Agency went so far as to lay out a roadmap for "de-Americanizing" the world economy, suggesting a new system be developed that "respects the sovereignty of all nations" and "keeps the U.S. out of the affairs" of other nations.
The editorial called for increasing the voice of emerging market economies in major financial institutions, meaning they would like to see third-world economists appointed to higher posts in first-world financial institutions.
The editorial also called for the end of the dollar as the world's reserve currency. China has previously suggested use of their Yuan (Renminbi) for the world's reserve currency.
China isn't fooling anybody. Although even most Americans would agree the antics in Washington are but a circus act, there should be no question that the United States remains the world's chief superpower, economically, politically, and militarily. The Pax Americana is alive and well. Historians will recall the Pax Romana, although politically stable, was also a time of occasional troubles, as is normal in any state.
China has dreams of becoming the world's leading economic power, but despite massive wealth in raw material and human capital, lagging technological capabilities combine with the handicap of a controlled market economy and ultimately the nation can compete, but never truly rival the free market of the western world.
Of course, that could change. China does see the sense in free market reforms and has progressed by leaps in the economic realm. However, to truly succeed at their goal, the United States must fail. A default would be a start, but the breakdown of the free market system and the advent of American socialism is the key.
Socialism is a brake on economies and is the greatest threat to U.S. financial hegemony. As government mandates and new taxes on wealth become vogue in the United States, the risk of such a development is real. However, it remains distant, at least for now. Likewise, Chinese financial dominance also remains distant, a fact for which Americans can be grateful.
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