CHINA FEARS U.S. DE­FAULT

The Washington Times Weekly - - Geopolitics -

U.S. of­fi­cials say re­cent state­ments by Chi­nese au­thor­i­ties in­di­cate fear in Bei­jing that a U.S. gov­ern­ment de­fault would en­dan­ger China’s $1.3 tril­lion worth of in­vest­ments in the United States.

State-con­trolled Chi­nese press ac­counts, a barom­e­ter for of­fi­cial gov­ern­ment poli­cies, pre­sented lim­ited cov­er­age of the par­tial U.S. gov­ern­ment shut­down and pend­ing de­fault in the debt ceil­ing de­bate.

Chi­nese Vice Fi­nance Min­is­ter Zhu Guangyo said at a news con­fer­ence Mon­day that the U.S. — as the world’s largest econ­omy and a ma­jor sup­plier of re­serve cur­rency — needs to make sure cred­i­tors are pro­tected.

“Safe­guard­ing the debt is of vi­tal im­por­tance to the econ­omy of the U.S. and the world,” he told re­porters in Bei­jing.

“This is the United States’ re­spon­si­bil­ity,” Mr. Zhu said, adding that re­solv­ing the is­sue is crit­i­cal as the Oct. 17 dead­line for rais­ing the debt ceil­ing nears.

Pres­i­dent Obama was asked this week about the wor­ries of cred­i­tors like China and Ja­pan, which has $1.1 tril­lion in U.S. debt hold­ings.

“I won’t dis­close any spe­cific con­ver­sa­tions, but ob­vi­ously my mes­sage to the world is the United States al­ways has paid its bills, and it will do so again,” Mr. Obama said.

“But I think they’re not just look­ing at what I say. They’re look­ing at what Congress does, and that ul­ti­mately is up to” House Speaker John A. Boehner.

Mr. Obama dis­missed for­eign con­cerns, not­ing that democ­ra­cies fre­quently have “tus­sles over the bud­get.”

Chi­nese press com­men­tary on the fi­nan­cial cri­sis has in­cluded an Oct. 2 re­port that called the im­passe a ma­jor worry and crit­i­cized the United States for years of “ir­re­spon­si­ble spend­ing.”

Another Chi­nese ar­ti­cle said a U.S. de­fault would pose a sys­temic risk to the fi­nan­cial sys­tem and pro­duce vo­latil­ity in world fi­nan­cial mar­kets.

Most of China’s rul­ing elite, in­clud­ing gov­ern­ment of­fi­cials and state in­dus­tri­al­ists, has in­vested bil­lions in U.S. mar­kets, which they view as a se­cure fi­nan­cial oa­sis.

Chi­nese gov­ern­ment con­cerns con­trast with re­cent un­of­fi­cial news out­lets in China that view the U.S. gov­ern­ment shut­down as an el­e­ment of a de­sired demo­cratic sys­tem.

The daily news­pa­per Nan­fang Dushi Bao last week noted the “pow­er­ful so­ci­ety of the United States” for guar­an­tee­ing nor­mal­ity “even with­out the gov­ern­ment.”

It said the shut­down is an ex­treme ex­am­ple of an in­ef­fi­cient two-party po­lit­i­cal sys­tem but said that was bet­ter than com­mu­nist China’s “non­trans­par­ent gov­ern­ment.”

One Chi­nese blog­ger said the Chi­nese should be ashamed be­cause in the United States “ev­ery penny of the pub­lic’s money must be spent with the peo­ple’s con­sent.”

By con­trast, China’s col­lec­tive dic­ta­tor­ship con­trols all fi­nan­cial de­ci­sions. the use of cy­ber as a means of theft of Amer­i­can com­mer­cial tech­nol­ogy and in­tel­lec­tual prop­erty rep­re­sents a sig­nif­i­cant prob­lem in our eco­nomic re­la­tion­ship,” the se­nior of­fi­cial told re­porters trav­el­ing with Mr. Kerry to dual meet­ings of the As­so­ci­a­tion of South­east Asian Na­tions and the East Asia Sum­mit. China’s cy­ber­at­tacks against U.S. gov­ern­ment and cor­po­rate tar­gets has cost the United States an es­ti­mated $140 bil­lion in lost data, ac­cord­ing to gov­ern­ment and in­dus­try es­ti­mates.

The U.S. of­fi­cial also said another key topic will be Chi­nese en­croach­ment in the South China Sea, which has rat­tled Viet­nam, the Philip­pines, Malaysia and other states in the re­gion that fear grow­ing Chi­nese hege­mony.

The 18 ASEAN mem­ber states will dis­cuss re­solv­ing dis­putes in the South China Sea, in­clud­ing “the role of the United States as a long-stand­ing cham­pion of se­cu­rity and sta­bil­ity in the re­gion and as an ad­vo­cate for the rule of law, peace­ful res­o­lu­tion of dis­putes, free­dom of nav­i­ga­tion, and the prin­ci­ple of unim­peded law­ful com­merce,” the of­fi­cial said.

“Now this is an area of, by and large, vi­o­lent agree­ment be­tween ASEAN and the United States,” the of­fi­cial said, later clar­i­fy­ing that use of the term “vi­o­lent” means “strong.”

The Army an­nounced Oct. 2 that, af­ter a “com­pre­hen­sive re­view,” 13 ROTC pro­grams will be closed next year.

The pro­grams pay for schol­ar­ships for stu­dents who join the Army af­ter grad­u­a­tion.

“The de­ci­sion to close the 13 ROTC pro­grams is not a re­flec­tion on the qual­ity of those aca­demic in­sti­tu­tions or the out­stand­ing of­fi­cers pro­duced at those schools,” said Karl F. Sch­nei­der, act­ing as­sis­tant sec­re­tary of the Army for Man­power and Re­serve Af­fairs.

Mr. Sch­nei­der said in a state­ment that the clo­sures were an ef­fi­ciency mea­sure and de­signed to main­tain “a pres­ence in all 50 states.”

The Army said a de­cline in the num­ber of lieu­tenants pro­duced by the 12 mostly ru­ral and South­ern col­leges was a fac­tor, along with “shift­ing de­mo­graph­ics across the coun­try.”

Seven of the 12 pro­grams closed were at schools in Alabama, Arkansas, Ge­or­gia, Ken­tucky, Mis­sis­sippi and Ten­nessee.

Wil­liam Cole, pres­i­dent of the Univer­sity of North Alabama, said he was sur­prised by the de­ci­sion.

“We were shocked to learn of this de­ci­sion, which was made with­out con­sul­ta­tion and came with­out warn­ing. ROTC has been a proud part of the tra­di­tion of UNA for 65 years, and has pro­duced many fine of­fi­cers,” he said.

Out­side the South, five pro­grams were closed in Cal­i­for­nia, Michi­gan, North Dakota, South Dakota and Wis­con­sin.

A de­fense of­fi­cial crit­i­cal of the pol­icy said it ap­pears to be a sub­tle move by the ad­min­is­tra­tion to change the po­lit­i­cal char­ac­ter of the of­fi­cer corps.

“Po­lit­i­cally steal­ing schol­ar­ships away from his­tor­i­cally South­ern con­ser­va­tive uni­ver­si­ties and plac­ing them in lib­eral, pro­gres­sive lo­ca­tions like New York and Chicago seems to be pretty clear ger­ry­man­der­ing of the Army’s of­fi­cer corps,” the of­fi­cial said.

A spokesman for the Army Cadet Com­mand could not be reached for com­ment.

Bill Gertz can be reached at @Bil­lGertz.

Li Ke­qiang

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