Spectre of US debt default looms at Asia summit

Spectre of US debt default looms at Asia summit

BANDAR SERI BEGAWAN, Brunei - The United States sought to reassure Asian leaders gathered for an annual summit Thursday that Washington would resolve its political stalemate, after China voiced concern over a possible US debt default.

The spectre of a calamitous default has emerged as a major issue at the Asian summit in Brunei, held in the absence of President Barack Obama after he was forced to stay home due to the US government shutdown.

With Asian countries like China sitting atop a mountain of Treasury bonds, Chinese Premier Li Keqiang expressed "Beijing's concern about Washington's debt-ceiling problem".

Li conveyed that message in talks with Obama's stand-in, US Secretary of State John Kerry, late Wednesday in Brunei, China's official Xinhua news agency reported.

A US official travelling with Kerry confirmed Thursday that the debt ceiling was discussed, but downplayed Beijing's concerns, saying Li had vowed continued investment in the world's largest economy.

"Secretary Kerry made clear that this is a moment in Washington politics and reaffirmed the president's commitment to resolving the issue," the official told reporters.

"They also agreed that the United States has one of the strongest economies in the world and that they have a shared interest in continuing the close economic working relationship."

China held US$1.277 trillion (S$1.6 trillion) in US debt as of July, according to Treasury Department figures.

Kerry and Li joined 16 other world leaders in Brunei on Thursday for the East Asia Summit - the climax of nearly a week of top-level meetings which began in Bali at the Asia-Pacific Economic Cooperation forum's annual gathering.

As he did in Bali, Kerry sought to assure Asian leaders in Brunei that Obama's no-show did not signal wavering US interest to the region.

He stressed Washington's "continued commitment to the region" and offered verbal support to allies wary of China's territorial ambitions, according to a copy of his address to the summit.

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