US debt crisis spurs Chinese calls for 'de-Americanized' world

The crisis shows that China and the rest of the world should start to "de-Americanize," according to a strongly worded commentary from Xinhua news agency, China's leading government-controlled news outlet.

"The world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites," the commentary said. "Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated."

"The congressmen are behaving irresponsibly not only for other countries but also for its own creditors," said Mei Xinyu at the Chinese Academy of International Trade and Economic Cooperation, which has ties to China's Ministry of Commerce. "They are gambling the U.S. future on their political struggle interests."

Others have gone further, such as Zhao Xijun, deputy dean at Beijing's Renmin University School of Finance, who likens Congress to kidnappers holding global investment for ransom.

"The two political parties in the U.S. have disregarded the interest of the rest of their country and the world," he said.

China is the largest foreign holder of U.S. Treasury bonds, with roughly $1.28 trillion, although holdings have declined slightly in absolute terms in the past year, and more sharply as a proportion of total reserves in the past decade.

Meanwhile, Japan — the second-largest holder of U.S. debt with $1.14 trillion — has expressed similar concerns. "The U.S. must avoid a situation where it cannot pay, and its triple-A ranking plunges all of a sudden," Japan's finance minister, Taro Aso, said last week.

For China, a U.S. default could mean a shock to China's assets, effects on its currency issuing, and exchange rate fluctuations, Mei said.

Reaction in China's financial world, however, has stopped well short of panic, with many believing that last-minute negotiations will defuse the crisis. But that doesn't mean there isn't anger, said Chinese experts.

Chinese leaders have remained reserved in their official comments. Last week, Vice Finance Minister Zhu Guangyao noted that the "clock is ticking," and Chinese Premier Li Keqiang said China is paying "great attention."

But frustration within China has encouraged further discussion about measures such as diversifying the country's holdings.

Sunday's Xinhua opinion piece pushed for establishing a new international reserve currency to replace the dominant U.S. dollar, "so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States."

But the reality, many here acknowledge, is that the United States and China are inexorably intertwined.

For all the talk of de-Americanization, moving away from the U.S. dollar anytime soon is unlikely, Chinese experts say. And while Chinese economists say diversification of the country's holdings is a good idea regardless of the current crisis, it could only happen incrementally or risk volatility.

The manufactured, political nature of the looming debt crisis, however, has flummoxed many here, who are struggling to understand what appear to be self-inflicted wounds by U.S. leaders.