BEIJING, Jan 2 (Reuters) - The last-minute U.S. deal over
tax increases has fixed one problem, but the world's largest
economy must get to grips with a budget deficit that threatens
not a "fiscal cliff" but a "fiscal abyss", China's Xinhua news
agency said on Wednesday.
The state news agency said in a commentary, issued in
English on its website, that while the United States was clearly
the dominant economic power, it "simply cannot live on borrowed
prosperity forever", and its politicians seemed reluctant to
tackle its total debt of about $16 trillion.
"In a democracy like the United States, tax increases and
spending cuts, the exact dose of medicine needed to cure its
chronic debt disease, have long proved hugely unpopular among
voters," Xinhua said.
"So the politicians have chosen to kick the can down the
road again and again. But as we all know, the can will never
disappear. Sometime and somewhere, you might trip over it and
fall hard on the ground, or in the U.S. case, into an abyss you
can never come out of."
China has a strong interest in a healthy U.S. economy. It
sits on the world's biggest pile of foreign exchange reserves,
worth $3.3 trillion, and as much as 70 percent of the holdings
are invested in U.S. dollar assets, including U.S. Treasuries,
according to analysts.
The United States is also a major export market for China.
Global stock markets rose on Wednesday on relief that the
U.S. had passed measures to avert the huge tax increases and
spending cuts that would have pushed the economy into recession.
However, Xinhua also took aim at U.S. politicians, saying
that if they came so close to falling off a cliff, "they are far
less likely to reach a deal to help their country climb out of
In separate commentaries Xinhua published on Tuesday on the
fiscal cliff debate, it called on the United States to live up
to its global economic responsibilities and also blamed its
poorly functioning political system for the mess
Such commentaries are not policy statements as such, but can
be read as a reflection of Chinese government thinking.
Wednesday's commentary can be found at: