US politics held world hostage in debt crisis: Xinhua

BEIJING - US politicians have held the rest of the world hostage in the crisis over the debt ceiling, China's official news agency Xinhua said Thursday.

The remarks came in a bylined English-language commentary released barely an hour after President Barack Obama signed the deal ending the federal government shutdown and raising the limit on Washington's borrowing.

"The founding fathers of the United States of America created Congress for the sake of balance of power," it said. "They would turn in their graves if they saw their design being kidnapped for political brinkmanship.

"Although they clearly knew the dire consequences of a default on the US economy and the rest of the world, the Democrats and Republicans played brinkmanship into the final moment for the sake of partisan interests."

The government shutdown, the narrowly-averted threat of default and the horse-trading surrounding the situation showed that "Congress itself has become the problem", it said.

China is a one-party state where the Communist authorities retain an iron grip on power, regularly ruling out any move towards Western-style democratic politics.

"With the world economy struggling in crisis, politicians at Capitol Hill seem to be too much engaged in political wrangling to remember their country's responsibilities as the world's largest economy, and, as they say, the world leader in other fields," the Xinhua commentary said.

"Brinkmanship of this kind means US domestic politics is holding the whole world hostage," it added.

China has the world's largest foreign exchange reserves, most of them held in dollars, and is the largest foreign holder of US Treasury bills, with US$1.28 trillion (S$1.6 trillion) according to the latest available figures from Washington.

"The saga in Washington is teaching America's creditors a lesson: US politicians are ready to fight each other at the expense of debt-holders' interests," the commentary said.

"US Treasury bonds may no longer be safe investment," it added, advising "domestic or foreign" investors "to make plan B".

"At the same time, Uncle Sam is strongly advised to drop this dangerous game of political brinkmanship to win back confidence if it wants to maintain its role as the world leader," it said.