HONG KONG: It is not just many Americans who are upset about the Standard & Poor's downgrade of US debt. A lot of people in China are angry, too. But they are aiming their venom at the Chinese government.
Chinese Internet sites lit up over the weekend with criticism of Beijing's management of the country's foreign reserves - a usually esoteric subject that had attracted little public attention.
But the S&P action hit a nerve. The ambitions of the Chinese people, eager to take their part as consumers in their nation's economic success story, have in many ways been stifled by their government's fiscal and monetary policies.
China's stock market plunged Monday, as investors worried that recent events in the United States and Europe would weaken demand for Chinese exports. The Shanghai A-share stock market closed down 3.78 percent and was the third-worst performer in Asia on Monday, trailing only markets in Taiwan and South Korea.
"The United States' sovereign credit rating suffered a downgrade, why did we become the biggest victim?" one microblogger wrote on Sina Weibo, one of the more popular sites, which had hundreds of such postings. "China is always bowing to the United States, when will China really rise up and cast aside its constant fear of the United States' reactions!"
Many of the Internet postings were similarly nationalistic, questioning whether the government had acted in China's best interests by investing about half of the country's $3.2 trillion worth of foreign reserves in US Treasury securities.
No other country's government comes even close to such an outflow.
"On the question of US debt, China's strategic decision makers are pigs, they would rather let the people's money be used by others than let the money be used by their own people," said one posting over the weekend. The comment soon disappeared, presumably removed by censors.
But much of the outcry seemed to be more about venting wounded pride than proposing monetary alternatives.
That may be because, whether the microblogging patriots realize it or not, few other options exist as long as China sees the need to buy tens of billions of dollars each month to keep its currency weak and protect the nation's export machine. Too few substitutes for US Treasurys are available to absorb China's huge foreign reserves.
Still, the Chinese political establishment does not want to be perceived by the public as too accommodating of US financial policies. That may be why the state-run news media have been harshly critical of the United States' debt management woes. The attacks that started on Saturday with the state-run news agency, Xinhua, blasting America's "addiction to debts," continued Sunday and Monday with critical commentaries in state-owned newspapers.
Just as notably, though, the central bank and other government agencies remained officially silent about the downgrade.
In fact, in a move that could hardly be deemed anti-American, the central bank, the People's Bank of China, let its currency, the renminbi, climb 0.23 percent against the dollar Monday morning in the daily fixing of its value. The United States has long pressed Beijing to let the renminbi rise in value.
Chinese question why the govt has invested half of the count
CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
09 August 2011
CAclubindia
