China, Japan fret about next US debt deadline
Deal or no deal, the US Congress’ dance with default impressed policymakers and investors in China and Japan with just how vulnerable their own economic revival plans are to the next political tantrum on Capitol Hill.world Updated: Oct 18, 2013 23:39 IST
Deal or no deal, the US Congress’ dance with default impressed policymakers and investors in China and Japan with just how vulnerable their own economic revival plans are to the next political tantrum on Capitol Hill.
The 11th-hour agreement on Wednesday between Congressional Republicans and Democrats to raise the limit on US government borrowing and end a 16-day government shutdown also averted a default on US Treasury bonds that had threatened the global economy and financial system.
But Congress gets another chance to hold US creditworthiness hostage early next year ahead of a new Feb 7 deadline to approve a debt ceiling increase. “We’re glad a deal has been struck,” said a Japanese policymaker, who spoke on condition of anonymity. “But the uncertainty will remain and it will be the same thing all over again early next year.”
Perhaps no two economies outside the United States have more at stake in Washington’s recurring drama than Japan and China. Not only are they the second- and third-largest economies, but they lend Washington more money than any other single nation. China held $1.28 trillion in US.
Treasury securities at the end of July and Japan owned $1.14 trillion. A default would likely have devastated the value of their holdings.
First Published: Oct 18, 2013 23:32 IST