Yesterday we wrote about how Washington's last-minute deal to raise the debt ceiling and cut spending had failed to settle the stock market, which tanked on more signs of a sluggish economic recovery. Today we're hearing from another disgruntled constituency: China. Within hours of Moody's and Fitch--two of the "big three" Western credit rating agencies--announcing that they would maintain America's AAA credit rating, one of China's major private credit rating agencies downgraded its U.S. credit rating from A+ to A--a level, Reuters points out, that puts the U.S. on par with Spain and Estonia. "The squabbling between the two political parties on raising the U.S. debt ceiling reflected an irreversible trend on the United States' declining ability to repay its debts," Dagong Chairman Guan Jianzhong told CNN.
China's state-run media is issuing even sharper critiques. In an editorial for the state-run news agency Xinhua today, Deng Yushan--who condemned U.S. politicians last week for playing a "game of chicken" as the global economy hung in the balance--once again criticized Washington's "madcap farce of brinkmanship" and "blind eye to its runaway debt addiction." The deal, he continued, "failed to defuse Washington's debt bomb for good, only delaying an immediate detonation by making the fuse an inch longer." A Global Times editorial similarly observed that "raising the debt ceiling simply means the U.S. can now borrow itself into further debt." In the People's Daily overseas edition, a Chinese researcher urged China to stop investing its foreign exchange reserves in volatile dollar assets, deeming the raising of the U.S. debt ceiling "a double-edged sword for China."