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U.S. debt woes stoke concerns in China despite Congress deal

02 August 2011 19:57 (UTC +04:00)

Baku-APA.The U.S.’s debt default crisis is poised to be over after U.S. lawmakers approved an increase in the country’s debt limit on Tuesday, APA reports quoting Xinhua. However, China still has reasons to be jittery, as ripples of lingering U.S. deficit problems will continue to reach China’s shores.

Economists said that the U.S.’s debt relief plan, expected to be passed by the U.S. Senate late Tuesday, is merely a form of temporary relief, with long-term debt problems remaining.

The House of Representatives on August 1 approved legislation that will raise the U.S. debt limit by at least 2.1 trillion U.S. dollars and cut federal spending by more than 2.1 trillion U.S. dollars over the next decade. The measure was passed just one day before a threatened default.

The measure is still subject to final approval in the Senate, after which it will be sent to U.S. President Barack Obama for a signature.

Economists agreed there is no doubt that the debt-limit drama will conclude ahead of deadline after a months-long battle.

"It (approval of the debt plan) is within our expectations", said Wang Jun, an economist with the China Center for International Economic Exchanges.

The U.S. government can’t afford to default on its debt and ruin the credit of the U.S. dollar, he said.