Government Shutdown: China warns Washington of Impending Global

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As the US Government Shutdown continues and stocks continue to slump on Wall Street and around the world, China has called for quick action by Washington to avoid what would be a calamitous default on U.S. government debt.

It was China’s first public comment on the looming Oct. 17 deadline for President Obama and Congress to increase the nation’s borrowing capacity.

Failure to raise the debt ceiling would leave the U.S. government unable to pay its bills, a problem of grave concern to the world’s economy and especially to China, which holds nearly $1.3 trillion in U.S. Treasury bonds.
“We naturally are paying attention to financial deadlock in the U.S. and reasonably demand that the U.S. guarantee the safety of Chinese investment there,” said Chinese Vice Finance Minister Zhu Guangyao. “On the question of the debt ceiling, the Chinese side feels the U.S. needs to take realistic and resolute steps to ensure against default on the national debt,” he added.

The debt ceiling is not the only issue creating paralysis in Washington. Republicans and Democrats also are deadlocked on new spending to end the government shutdown that began one week ago and threw 800,000 federal employees off the job.

But the rhetoric Monday was unchanged — and generally uncompromising — while new polls suggested Republicans are paying a heavier price than Democrats for the deadlock.

The Dow Jones industrial average fell about 1% to its lowest level in a month as economists warned a failure by Congress to raise the federal borrowing limit could cause economic shockwaves. Leading indexes ended down 1.2% in Japan, 0.7% in Hong Kong, 0.4% in Germany and 0.3% in Britain.

Obama reiterated his demand that Speaker John Boehner (R-Ohio) allow the House to vote on bills that would end the shutdown and raise the debt ceiling without conditions. In a surprise appearance at the Federal Emergency Management Agency, Obama said, “Pass a budget, end the government shutdown, pay our bills, and prevent an economic shutdown.”