By CCTV reporter Grace Brown
BEIJING, Oct. 2 (Xinhuanet) -- Along with millions of Americans, the US government closure could also hit China. According to the latest US Treasury data, China remains America’s biggest foreign creditor But despite this, analysts say the impact on China is likely to be limited.
A new test for Sino-US ties. As the US government begins shutting down for the first time in 17 years with China holding a substantial amount of its debt.US Treasury data shows China remains the biggest foreign buyer of US government debt. Surging to nearly 1.28 trillion US dollars in July, ahead of Japan. That’s up by 1.5 bilion dollars from it’s US Treasury holdings in June.
But Republicans and Democrats remain divided on government spending cuts, forcing it’s shutdown. Economists say if it remains closed for three weeks, this could knock off 1.4 percent of it’s GDP. Which could hurt Chinese exports. And force the US government to taper its stimulus sooner - much of which, has ended up in China.
The US government shutdown comes as China begins it’s week long National Day Holidays, so any official reaction is likely to be delayed. But analysts say it’s likely to be mild. As Beijing remains more focussed on boosting business ties with America, than the politics on Capitol Hill.
Professor Liu Bao Cheng, an advisor to China’s Ministry of Commerce from the University of International Business in Beijing, says China has taken steps to mitigate economic uncertainty, reducing its reliance on American consumers with new policies to drive domestic consumption. As well as investing more in southeast Asia and Africa.
"For the Chinese government, I think they have been really accustomed to fluctuations, not only in China but in the whole financial market. So therefore they have been rather flexible. So this is a drama, but it’s not a shockwave to the Chinese decision making over the management of its portfolio. The managers of the Chinese sovereign fund - I think they are very rational, they are smart business people - after years when their fingers have been burned a number of times. So one consideration which has already been underway is to diversify China’s portfolio of foreign exchange reserves and also make it more flexible. And another hope is that given the difficult time of the Federal government they may be able to speed up a number of changes for example, the high tech export control to China and also they may get into more closer talks to work with China on a number of international issues." Liu Baocheng, Professor at University of Int'l Businesss said.
But despite this, the US dollar's recent fall, could force the renminbi to rise. Inflating the price of Chinese goods. As a result, it’s likely business leaders in China will be closely watching what happens next in Washington.
(Source: CNTV.cn)
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