Wednesday, August 3, 2011

China warns U.S. on managing its debt

HONG KONG — China's central bank governor called Wednesday for the U.S. to "take responsible policy measures to handle its debt," a day after the world's largest economy reached a bipartisan deal to reduce its deficit and lift its borrowing limit to avoid a default.

The comments from People's Bank of China Governor Zhou Xiaochuan, posted on the central bank's website, signal China's lingering concern over America's financial health. China is the U.S.' largest foreign creditor, holding at least $1.16 trillion in Treasury securities.

Zhou also warned that stability is needed in the highly traded U.S. debt market, and said China plans to continue diversifying its currency reserves.

"Large fluctuations and uncertainties in (the Treasury) market would undermine the stability of the international financial system and hinder global recovery," he said.

China isn't the only one concerned with the U.S.' financial condition.


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