News / Economy

Chinese Rating Agency Cuts US Sovereign Credit Rating

FILE - A photo illustration shows a $100 banknote placed above Chinese 100 yuan banknotes in Beijing.
FILE - A photo illustration shows a $100 banknote placed above Chinese 100 yuan banknotes in Beijing.
Reuters
A Chinese ratings agency cut its credit rating for U.S. sovereign debt by one notch to A-minus from A on Thursday, saying a deal struck by Congress to raise the government's borrowing ceiling failed to solve the cause of its debt problem.

Dagong Global Credit Rating said that the temporary fix of the debt issue would not defuse the fundamental conundrum of the U.S. fiscal deficit or improve repayment ability in the long-term, but could trigger defaults at any time in the future.

“The deal means only an escape from a debt default for the time being, but hasn't changed the fact that the growth of government borrowing has largely outpaced overall economic growth and fiscal revenues,” China's biggest home-grown ratings agency said in a statement.

The U.S. Congress on Wednesday approved an 11th-hour deal to end a partial government shutdown and pull the world's biggest economy back from the brink of a historic debt default that could have threatened financial calamity.

Dagong said the increase in the debt ceiling, for the fifth time since President Obama took office in 2009, provided further proof of the U.S. government's inability to make improvements to fiscal fundamentals that were needed to enhance its debt servicing capability.

It said it held a negative outlook for the United States, noting that the Federal Reserve continued to inject dollars into the market through quantitative easing policies, eroding the value of the outstanding debt and hurting creditors' interests.

The downgrade put the United States several notches below Dagong's top rating and on par with Brazil, Israel and Panama, among others.

Dagong's ratings are barely watched outside of China, and major international credit agencies classify most countries very differently from the Chinese agency.

Dagong estimated that the U.S.'s foreign creditors could have suffered an estimated loss of $628.5 billion between 2008 and 2012 due to a weakening of the U.S. dollar.

China, sitting on the largest stockpile of foreign exchange reserves in the world, is the biggest holder of U.S. treasuries.

Dagong's views do not necessarily represent the Chinese government's stance, however, its analysis often runs in tandem with remarks from government officials.

China's Vice Finance Minister Zhu Guangyao had earlier urged the U.S. government to take “concrete steps” to resolve the fiscal cliff issue and meet its responsibility to uphold stability of international financial markets.

A commentary on the official Xinhua news agency on Thursday took the two main U.S. political parties to task for “brinkmanship”.

“The saga in Washington is teaching America's creditors a lesson: U.S. politicians are ready to fight each other at the expense of debt-holders' interests and U.S. Treasury bonds may no longer be safe investment,” the commentary said.

The commentary does not reflect official policy but is an insight into views held at the top levels.

Fitch Ratings said on Tuesday it had placed a negative outlook over its AAA rating for the United States due to the political brinkmanship. Moody's Investors Service rates the United States at Aaa, while Standard & Poor's rates it at AA-plus.

You May Like

As US Strikes Syria, China Sees Parallels at Home

Beijing is debating how much support to give international coalition against IS militants and trying to figure out how many Chinese nationals may have joined group overseas More

CDC: Ebola Could Infect 1.4 M by 2015

US health officials say if efforts to curb the outbreak are not increased, cases will soar dramatically by early next year More

Video USAID Provides $231 Million for Girls Education in 5 Countries

US Agency for International Development partners with celebrities to call attention to importance of education for girls worldwide More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Washington to Pyongyang: 'Shut This Evil System Down'i
X
Scott Stearns
September 23, 2014 10:52 PM
U.S. Secretary of State John Kerry is calling on North Korea to shut down prison camps and other human rights abuses following a United Nations Commission of Inquiry into "widespread and systematic human rights violations." VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Washington to Pyongyang: 'Shut This Evil System Down'

U.S. Secretary of State John Kerry is calling on North Korea to shut down prison camps and other human rights abuses following a United Nations Commission of Inquiry into "widespread and systematic human rights violations." VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video US, Gulf Allies Strike Islamic State Militants in Syria

United States forces have carried out strikes against Islamic State or ISIL militant positions in Syria - the first time Western forces have taken action on Syrian soil. Five U.S. allies from the Gulf joined the military action. Local reports suggest dozens of militants were killed. The U.S. also carried out unilateral missile strikes against a Syria-based terror group which Washington says poses an imminent threat to the West. Henry Ridgwell reports from London.
Video

Video High Intensity Focused Ultrasound Used to Kill Cancer Tumor

There is a new way of killing certain cancer tumors that allows the patient to go home on the same day. Surgeons at the Keck Medical Center of the University of Southern California became the first doctors to use this procedure on a patient with the help of high intensity focused ultrasound, or HIFU, and new robotic technology. Elizabeth Lee reports from Los Angeles.
Video

Video USAID Provides $231 Million for Girls Education in Five Countries

Hollywood stars Alicia Keys, Jennifer Garner and 30 others have voiced their support for a U.S.-backed initiative called "Let Girls Learn." The $231 million program, funded by the U.S. Agency for International Development, is aimed at ensuring public and quality education for girls worldwide. As VOA's Mariama Diallo reports, this new program will focus on five countries in Africa, South Asia, Latin America and the Middle East.
Video

Video UN: Relocation of Bedouins in Israel Weakens Two-state Solution

Rural Bedouins living in disputed lands east of Jerusalem could soon find themselves forcibly relocated. VOA's Sharon Behn reports from Jerusalem that while Israel defends the move as in the Bedouins’ best interests, the United Nations says the plan threatens the survival of the two-state solution with Palestinians.
Video

Video NASA’s MAVEN Probe Enters Mars Orbit

NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video Prolonged Drought Plagues SW Oklahoma Farmers

Parts of western Texas and southwestern Oklahoma have been in drought conditions for several years running and the deficit in rainfall has taken a heavy toll on cotton and grain production. Oklahoma Governor Mary Fallin says the state has suffered $2 billion in agricultural losses since 2011. There has been rain in recent weeks, but, as VOA’s Greg Flakus reports from Altus, Oklahoma, for most farmers it has been too late.
Video

Video For West Ukraine City, Conflict Far Away Yet Near

The western Ukrainian city of Lviv prides itself on being both physically and culturally close to Western Europe. The Russian-backed separatists in the eastern part of the country are 1,200 kilometers away, and seemingly even farther away in their world view. Still, as VOA’s Al Pessin reports, the war is having an impact in Lviv.
Video

Video Saving Global Fish Stocks Starts in the Kitchen

With an estimated 90 percent of the world’s larger fish populations having already vanished, a growing number of people in the seafood industry are embracing the concept of sustainable fishing and farming practices. One American marine biologist turned restaurateur in Thailand is spreading the word among fellow chefs and customers. VOA Correspondent Steve Herman reports from Bangkok.
Video

Video Chinese Admiral Key in China’s Promotion of Sea Links

China’s President last week wrapped up landmark visits to India, Sri Lanka and Maldives, part of a broader campaign to promote a new “Maritime Silk Road” in Asia. The Chinese government’s promotion efforts rely heavily on the country’s best-known sailor, a 15th century eunuch named Zheng He. VOA's Bill Ide reports from the sailor’s hometown in Yunnan on the effort to promote China’s future by recalling its past.
Video

Video Experts Fear Ebola Outbreak ‘Beyond Our Capability to Contain’

Each day brings with it new warnings about the deadly Ebola outbreak already blamed for killing more than 2,600 people across West Africa. And while countries and international organizations like the United Nations are starting to come through on promises of help for those most affected, the unprecedented speed with which the virus has spread is raising questions about the international response. VOA's Jeff Seldin has more from Washington.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid

World Currencies

EUR
USD
0.7768
JPY
USD
108.84
GBP
USD
0.6124
CAD
USD
1.0999
INR
USD
61.042

Rates may not be current.