At first I could not believe my eyes. China — ostensibly a communist nation — is now giving the U.S. government well-reasoned financial planning advice. This MarketWatch.com piece gives the details, which to me, suggest that China may be moving in a conservative, dare I say Tea Partyish, direction:
China used Standard & Poor’s decision to downgrade the U.S. credit rating to issue a sharply-worded rebuke of the U.S. government on Saturday, saying Washington can no longer borrow its way out of trouble.
Many of us find it obvious that we cannot borrow our way out of trouble. Our leaders in Washington DC and a plethora of pundits might disagree, but China is making some good points. MarketWatch continues:
…The U.S. 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 state-run Xinhua News Agency said Saturday, in Beijing’s first official response to the S&P action, according to wire service reports.“China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets,” it said…
I would quibble a bit with one point. China is the largest foreign creditor of the U.S. Taken together, he American people, Social Security, Medicare and the Federal Reserve collectively hold far more Treasury securities than China. But, I digress.
Separately, Sky News in Australia reported on even stronger language from China:
Beijing has slammed the United States after its credit rating was downgraded by Standard Poor’s from AAA to AA+, demanding Washington tightens its belt and confronts what it says is a debt-addiction.
…China is the largest foreign holder of U.S. debt, with $1.2 trillion of U.S. Treasury debt.
It says as the largest creditor of the world’s sole superpower, it has every right to demand that the United States addresses its structural debt problems and ensures the safety of China’s dollar assets…
I cannot argue with any of the points made here. In fact, the comments echoed a recent post of mine, Washington: Addicted to debt. In it, I made this point:
Addicted to debt
No matter how this debt ceiling debacle works out, I believe one conclusion is clear. Regardless which party is in power, Washington is addicted to debt…
Is China turning conservative?
I was also fascinated by the rather ‘conservative’ tone in the comments from Beijing. For example, China wants the U.S. to ‘tighten its belt’ and to ‘confront…a debt-addiction’ and to deal with its ‘structural debt problems’ and so on.
Are any of these comments materially different than what we have hearing from conservative commentators such as the Tea Party? Have conservatives taken over China?