China tells US “good old days” of borrowing are over

NEW YORK/SHANGHAI,  (Reuters) – China bluntly  criticised the United States today one day after the  superpower’s credit rating was downgraded, saying the “good old  days” of borrowing were over.
Standard & Poor’s cut the U.S. long-term credit rating from  top-tier AAA by a notch to AA-plus on Friday over concerns about  the nation’s budget deficits and climbing debt burden.
China — the United States’ biggest creditor — said  Washington only had itself to blame for its plight and called  for a new stable global reserve currency.
“The U.S. government has to come to terms with the painful  fact that the good old days when it could just borrow its way  out of messes of its own making are finally gone,” China’s  official Xinhua news agency said in a commentary.
After a week which saw $2.5 trillion wiped off global  markets, the move deepened investors’ concerns of an impending  recession in the United States and over the euro zone crisis.
Finance ministers and central bankers of the Group of Seven  major industrialised nations will confer by telephone later on  Saturday or on Sunday, a senior European diplomatic source said.
The source said the credit rating downgrade had added a  global dimension on top of the euro zone debt issue, raising the  need for international coordination.
“The G7 will confer by telephone. It’s not yet confirmed  whether it will be in one stage or in two stages, tonight and  tomorrow,” the source said.
French Finance Minister Francois Baroin, who would chair  such a meeting under France’s G7 and G20 presidency, said it was  too early to say whether there would be an early G7 gathering.
In the Xinhua commentary, China scorned the United States  for its “debt addiction” and “short sighted” political  wrangling.
“China, the largest creditor of the world’s sole superpower,  has every right now to demand the United States address its  structural debt problems and ensure the safety of China’s dollar  assets,” it said.
It urged the United States to cut military and social  welfare expenditure. Further credit downgrades would very likely  undermine the world economic recovery and trigger new rounds of  financial turmoil, it said.