MercoPress. South Atlantic News Agency

China warns US on ‘debt addiction’; demands global supervision of dollar issues

The almighty US dollar, not so reliable as before says Beijing

Beijing bluntly criticized the United States after the superpower's credit rating was downgraded, saying the “good old days” of borrowing were over. S&P cut the US long-term credit rating from top-tier AAA by a notch to AA-plus on yesterday, over concerns about the nation's budget deficits and climbing debt burden.

China, which is the US biggest single creditor, said Washington only had itself to blame for its plight and called for a new stable global reserve currency.

“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,” China's official Xinhua news agency said in a commentary.

After a week which saw 2.5 trillion dollars wiped off global markets, the move deepened investors' concerns of an impending recession in the United States and over the Euro zone crisis.

The source said the credit rating downgrade had added a global dimension on top of the Euro zone debt issue, raising the need for international coordination.

In the Xinhua commentary, China scorned the United States for its “debt addiction” and “short sighted” political wrangling.

“China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets” it said.

It urged the United States to cut military and social welfare expenditure. Further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil, it said.

“International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country” Xinhua said.

In contrast to the Chinese criticism French Finance Minister Francois Baroin, who chairs G7 and holds the G20 presidency said France had faith in the United States' ability to get out of this ”difficult period”.