China Gives Mesaured Response To Possible U.S. Default

China is the biggest foreign holder of U.S. debt — totaling more than $1.3 trillion. Chinese media are using the American budget struggle as an implicit justification for China's system.

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RENEE MONTAGNE, HOST:

One country that has a huge stake in seeing the U.S. pull back from a default is China. China is the biggest foreign holder of U.S. government debt, totaling some $1.3 trillion.

So to learn more about the reaction in China to the debt crisis in Washington, we turn to NPR's Frank Langfitt in Shanghai. Good morning.

FRANK LANGFITT, BYLINE: Good morning, Renee.

MONTAGNE: And what have you been hearing and seeing?

LANGFITT: Well, the leaders, officially the response has been pretty measured here. But there was a commentary a few days ago in Xinhua, that's the new China news service, that called for a de-Americanization of the world. It was very blunt and it talked about how the party politics in the U.S. are putting other countries' dollar assets at risk, so the U.S. was abusing its superpower status.

And here was kind of the key quote. It said such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated.

MONTAGNE: And Frank, Xinhua is the government's official news service, so how seriously does one take that criticism?

LANGFITT: You know, not that seriously. The commentary was only in English. It wasn't in Chinese, and so it seems more like a rhetorical jab at the United States, and over the years the Chinese Communist Party has capitalized on U.S. mistakes to raise questions about the American political and economic system.

You saw this recently with Edward Snowden, the NSA leaker. They used that as an opportunity to say, hey, look, the U.S. spies as well. In this commentary there was also talk of possibly finding a new reserve currency, a currency that the whole world could use like the dollar, to replace the dollar. That could become serious in the future, but at the moment there's no logical immediate choice to go with that.

I think you'll also probably hear more talk of diversifying away from U.S. treasuries for the Chinese government. But the problem there, of course, is China has a ton of money. They need a big place to put all that money and treasuries have been relatively safe, at least up until now. And if they wanted to dump them, they'd end up flooding the market and driving down the value.

MONTAGNE: So lots of possible choices over there in China. Wondering though, when you look at the Internet, what are regular Chinese people saying about what's going on here in America with this debt crisis?

LANGFITT: You know, it's really interesting. It's not getting that much traction on the Chinese Internet. There's more amusement and bafflement. The idea of a government shutdown is a foreign concept here in a one-party state. There was somebody on the Internet recently saying, you know, where are the riots? Why isn't there more disorder?

Others are sort of impressed that there's a system of checks and balances that can have such a drastic result. You know, one thing that got some traction was - there was a photograph of an ordinary American actually volunteering and mowing the lawn around the Lincoln Memorial, and that was pretty popular.

But in terms of the risk of default, there are just not a lot of people on Chinese Internet that interested in it.

MONTAGNE: Frank, thanks very much.

LANGFITT: Happy to do it, Renee.

MONTAGNE: NPR's Frank Langfitt is speaking to us from Shanghai.

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