China & Japan warn US on default

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from Financial Times,

China and Japan ratcheted up pressure on the US to avoid an unprecedented US default on its debt as Democrats and Republicans continued their stand-off over the budget in the second week of a US government shutdown.

Two senior White House economic officials said on Monday that President Barack Obama would not back down from his refusal to negotiate with Republicans in Congress, increasing worries that the debt ceiling limit would be reached on October 17 without an agreement, raising the threat of a default.

In its first official reaction to the US political stalemate over the budget and looming debt ceiling deadline later this month, Beijing said “the clock is ticking” and urged politicians in Washington to “ensure the safety of the Chinese investments”.

Zhu Guangyao, vice-finance minister, told a media briefing that China has made clear its unease over the political impasse in Washington. In Japan, the Ministry of Finance is very worried about the potential impact on , according to a senior official. A US default could cause to dump the US dollar, which would sharply push up the value of the yen.

On Tuesday Japan’s finance minister Taro Aso called on “the United States to resolve its debt ceiling stand-off without delay”.

The absolute value of US bonds held by the Japanese government could decline if the situation was not brought to a swift end, he added.

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