Handle debt issue responsibly,China

With a combined holding of debt at 1.15 trillion,China is largest foreign holder of US treasury.

China,the biggest foreign owner of US treasury securities,has asked Washington to handle its debt issue responsibly,warning that any large fluctuations and uncertainties would undermine the stability of global financial system and hinder economic recovery.

Reacting to a last-minute debt deal clinched by US President Barack Obama that averted a global economic catastrophe,the Governor of the Peoples Bank of China,Zhou Xiaochuan welcomed it and noted that the US treasuries had been among the most actively invested and traded instruments in the global market. Large fluctuations and uncertainties in this market would undermine the stability of international financial system and hinder global recovery, Zhou said in a statement.

China is the largest foreign holder of US treasury securities,with its combined holding of US government debt topping 1.15 trillion dollars by May.

China also holds the worlds largest foreign exchange reserves at 3.2 trillion,with about two-thirds of that believed to be invested in US dollars. Zhou said China hopes the US administration and the Congress would take responsible policy measures to handle its debt issue in the light of the interests of the whole world,including those of the United States.

It will help ensure safe investment in the US treasuries and the effective functioning of the market. It will also help maintain the confidence of global investors and more broadly contribute to a strong,sustainable and balanced growth of the world economy,which has been promoted by the G20 leaders, he said.

Meanwhile,the state-run Xinhua news agency,in a terse commentary on the US debt deal,noted that the long tug of war between Democrats and Republicans has failed to defuse Washington8217;s debt bomb for good and has only delayed an immediate detonation by making the fuse an inch longer.

The madcap farce of brinkmanship has disclosed yet another ticking bomb in the heartland of the sole superpower in the world the crippling tendency to politicise the economics while trivialising the politics, it said. The last-minute deal did head off the gloomy scenario that the largest economy in the world could not honour its IOUs. But obviously,the combination of a debt limit increase and a spending reduction did not pack a punch powerful enough to make any sizeable dent in Washington8217;s deeper fiscal woes,the Xinhua commentary noted.