A recent editorial in the Chinese newspaper Global Times called for “de-Americanization.”
Concerned with the American government shutdown and the prospect of the debt ceiling not being raised, the editorial argued that the United States is too irresponsible to be allowed to remain the dominant power. “Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place.”
In the process of arguing for a new world order, the paper (which often publishes some of the most incendiary viewpoints coming out of China) took the opportunity to criticize the U.S. on a host of non-economic issues, ranging from engaging in drone strikes to failing “to defuse violence and conflicts, reduce poor and displaced population, and bring about real, lasting peace.” Worse, the U.S. has also “instigated regional tensions amid territorial disputes,” the last almost certainly referring to the ongoing problems in the East and South China Seas.
This editorial was then followed, a few days later, by the announcement that a Chinese financial ratings firm, Dagong, had downgraded American financial credibility, rating it an A–, comparable to Brazil.
The implication of all this is that Beijing is now leading a charge to replace the U.S. But the reality is that, while Beijing would dearly love to see the U.S. taken down one or more pegs, and reduced to no more than one among equals, its own behavior ensures that China itself will not replace the U.S.
Even as Dagong was downgrading the U.S. debt, for example, Chinese purchases of that same debt were setting new records. This is likely to continue as long as Beijing refuses to allow its currency to operate independently and instead insists on pegging it to the U.S. dollar.
Similarly, Beijing may blame the U.S. for “regional tensions amid territorial disputes,” but it is Chinese government ships in the Spratlys, the Senkakus, and around Scarborough Shoal that are causing growing Asian unease (and rising Asian defense budgets)—not the presence of the U.S. Navy.
Which is not to say that the Chinese comments are completely without merit. As Dagong’s press release observed, the reason for the downgrade was in part because of the growing American debt and continuous deficit spending. If Dagong’s actions were largely politically motivated, its analysis is little different from the American ratings agency Fitch, which also warned of a downgrade on American debt.
While the debt ceiling issue has been temporarily resolved, the larger concern about America’s constantly escalating debt runs the risk of making Dagong a new Cassandra.