China’s Premier Wen Jiabao today called on “relevant nations” to take “concrete and responsible fiscal and monetary policies” to restore the confidence of global investors.
Wen’s remarks were the first to be made by the government of China, the largest foreign holder of US debt, since an unprecedented downgrade of the United States’ credit rating last week.
They came as stock markets around the world plunged to fresh lows in a massive sell-off driven by fears of a new global recession.
Wen’s comments came days after ratings agency Standard & Poor’s downgraded the US from a top-flight AAA to an AA+ rating, largely because of the failure of US leaders to reach a consensus on containing the country’s spiralling debt.
China, which held about US$1.2 trillion in US debt at the end of June, has used its state media to launch an extraordinary barrage of criticism at the United States and, to a lesser extent, Europe.
On Monday, an editorial in the People’s Daily — the mouthpiece of China’s Communist Party — accused Western nations of putting the global economic recovery at risk by “ignoring their responsibility”.
“If developed countries including the US and European Union don’t take responsibility, it will impair the stable development of the global economy severely,” the newspaper said.
“Only if Western nations stop ignoring their responsibility and use a sharp blade of determination and courage to cut through the ropes binding their policies and strengthen coordination with developing countries will the global economy have hope of a stable recovery.”
The article appeared under the name Zhong Sheng, which means “voice of China”, and is often tagged to editorials in the People’s Daily.
China’s official Xinhua news agency has urged Washington’s Democrats and Republicans to stop blaming each other over the downgrade and find solutions.
“Disappointingly, instead of reflecting on themselves and sitting down to fix problems in a cooperated way, the Democrats and Republicans… are questioning the credibility of the downgrade ruling and blaming each other,” it said in a commentary yesterday.
On top of concern about the eurozone and US debt, Chinese inflation of 6.5 per cent, the highest level in three years, raised the chances of interest rate hikes that would curb economic activity in the world’s second biggest economy.