Kerry to reassure Asian leaders over US default

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BANDAR SERI BEGAWAN, Brunei: United States Secretary of State John Kerry sought to reassure Asian leaders on Thursday that Washington would resolve its political stalemate, after China voiced concern over a possible US debt default.

The specter of a calamitous default has emerged as a major issue at an annual Asian summit in Brunei, held in the absence of President Barack Obama after he was forced to stay home due to the US government shutdown.

With Asian countries like China sitting atop a mountain of Treasury bonds, Chinese Premier Li Keqiang expressed “Beijing’s concern about Washington’s debt-ceiling problem”.

Li conveyed that message in talks with Obama’s stand-in, Kerry, on Wednesday in Brunei, China’s official Xinhua news agency reported.


A US official traveling with Kerry confirmed on Thursday that the debt ceiling was discussed, but downplayed Beijing’s concerns, saying Li had vowed continued investment in the world’s largest economy.

“Secretary Kerry made clear that this is a moment in Washington politics and reaffirmed the president’s commitment to resolving the issue,” the official told reporters.

“They also agreed that the United States has one of the strongest economies in the world and that they have a shared interest in continuing the close economic working relationship.”

China held $1.277 trillion in US debt as of July, according to Treasury Department figures.

Kerry and Li joined 16 other world leaders in Brunei on Thursday for the East Asia Summit—the climax of nearly a week of top-level meetings that began in Bali at the Asia-Pacific Economic Cooperation forum’s annual gathering.

As he did in Bali, Kerry sought to assure Asian leaders in Brunei that Obama’s no-show did not signal wavering US interest to the region.

He stressed Washington’s “continued commitment to the region” and offered verbal support to allies wary of China’s territorial ambitions, according to a copy of his address to the summit.

The crippling budget standoff in Washington forced Obama to abandon plans to visit Asia where he had hoped to tout his “pivot” towards the region at the back-to-back summits.

That plan took yet another knock on Thursday, when Kerry shelved a visit to the Philippines set for the following day, citing an approaching tropical storm bearing down on the longtime US ally.

Apart from reaching a budget deal to end a government shutdown, Congress must agree by October 17 to raise the $16.7 trillion US borrowing limit—or risk a default on sovereign debt.

Failure to do so could see the United States default on its obligations for the first time in its history and spark what the White House warns will be dire global economic consequences.

Emerging economies—which have already borne the brunt of recent market upheaval over the expected tapering of US monetary stimulus measures—are particularly anxious to see a breakthrough.

AFP

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