If you are polite to others, you must ask for something.
The United States has recently improved its attitude towards China. U.S. Secretary of State Blinken changed his tone, admiring China’s mediation in the war between Russia and Ukraine, and the U.S. released Chinese flights to the U.S., obviously wanting to win Blinken’s visit to China.
State Councilor and Foreign Minister Qin Gang met with US Ambassador to China Burns in Beijing on May 8. Qin Gang said that the United States should correct its understanding of China, return to rationality, fasten the first button of Sino-US relations, and achieve mutual success in the better development of the two countries. What China refers to as the “first button” of Sino-US relations clearly refers to the Taiwan issue.
So what does the United States want from China, so that it is eager to engage in high-level contacts?
The debt crisis in the United States seems to be the most urgent. The U.S. federal government may hit the debt ceiling as soon as June 1, triggering a debt default!
As early as January 19 this year, the U.S. federal debt had reached $31.4 trillion. This is the statutory debt ceiling, the U.S. Treasury Department’s authorization to issue debt and borrow has been exhausted, and unless the U.S. Congress raises the debt ceiling, the government has no right to continue to borrow.
In January of this year, the U.S. Treasury Department began to initiate extraordinary measures, such as suspending certain routine expenditures, to avoid defaulting on the federal government’s debt. Now it has lasted for more than 4 months, and the House of Representatives controlled by the opposition Republican Party remains unmoved. Entering May, the United States is gradually approaching the critical point where it defaults on its debt and the government wants to suspend spending.
The White House Council of Economic Advisers released a report on May 3rd, stating that if the US government defaults on the contract in the short term but can solve the problem within a week, 500,000 jobs will be lost, the unemployment rate will rise by 0.3 percentage points, and annualized GDP will drop by 0.6%. The worst scenario is a long-term default. The deadlock lasts for up to 3 months, which will cause the stock market to plummet by 45%, GDP to drop by 6.1%, and the unemployment rate to rise by 5 percentage points, which may cause 8.3 million people in the United States to lose their jobs.
The U.S. government said it was so scary, but the Republican Party was unmoved.
Republican House Speaker McCarthy pushed the House of Representatives to pass the debt ceiling bill “Limit, Save, Grow” on April 26 with a narrow advantage of only two votes. The bill means that if the two parties can agree on the terms before March 31 next year, the debt ceiling can be raised by another $1.5 trillion. At the same time, the bill also requires recovering unused funds to respond to the new crown epidemic; cutting the budget for the IRS; canceling the student loan preferential policies promoted by the Biden administration; canceling the tax cuts related to new energy in the “Inflation Reduction Act” measures etc. Republicans say the plan might cut $4.5 trillion in government spending over 10 years.
Although the spending cuts proposed by the Republican Party seem very reasonable, every stick hits the Democratic Party’s key points, targeting President Biden’s economic, social, and people’s livelihood policies, all of which have to be paid by Democratic voters. The Democratic Party refused to accept it, and thus reached an impasse.
Although the outside world believes that the two parties will finally weigh the numbers, even if the default is only a short-term issue, the Biden administration is starting to prepare for a worse situation and improving relations with China is also a risk-avoiding measure.
Just imagine, if the United States begins to default on its debt on June 1, and China sells 848.8 billion U.S. dollars of U.S. debt in its hands, it will cause bond prices to plummet and debt interest rates to skyrocket. The Biden administration will be very uncomfortable, and the Republican Party will Negotiations are also extremely weak.
As the saying goes: “Eating others’ mouths is short, taking others’ hands softly.” Who told the United States to owe China so much money?
