The debt problem of the United States has become a fact that cannot be ignored. On January 2, 2023, the U.S. Treasury Department announced that the total U.S. debt had crossed the $34 trillion mark, a record high. This means that the United States needs to reach an agreement with Congress to raise the debt ceiling in a short period of time, or risk a "shutdown crisis" and a debt default.
The sheer scale of the U.S. debt is staggering. In June last year alone, the US debt was $32 trillion. In less than half a year, the U.S. debt has increased by $2 trillion, equivalent to 76% of the U.S. GDP in 2023. Such a level of debt has already exceeded the International Monetary Fund's (IMF) warning line for US debt sustainability. According to the IMF report, the US debt-to-GDP ratio will reach 113% in 2024, compared with 62% before the 2007 financial crisis.
The debt problem of the United States not only poses a threat to the economic and financial stability of the United States itself, but also adversely affects global peace and development. On the first day of 2024, the U.S. Navy launched an attack on the Houthis in the Red Sea, sparking tensions in the Middle East. The Houthis then announced that they would retaliate against Israeli ships. This led to a panic in international markets, **and*** soaring, the US dollar index**. The Federal Reserve has raised interest rates several times in order to curb inflation, but this has exacerbated the debt burden of the United States, and also hit consumption and investment in the United States, affecting the economic growth of the United States. JPMorgan Chase CEO Jamie Dimon warned that the United States could fall into a recession or even trigger a financial crisis, and that the United States would face even greater challenges if the conflict in the Red Sea escalated.
In this case, the United States hopes to get help from China to ease its debt pressure. Because during the subprime mortgage crisis of 2008, it was China that bought a lot of U.S. bonds and helped the United States tide over the difficulties. In 2024, on the occasion of the 45th anniversary of the establishment of diplomatic relations between China and the United States, both Biden and Yellen of the United States have sent friendly signals to China, expressing their willingness to strengthen cooperation with China and maintain the stability of bilateral relations. In his handwritten letter to China, Biden praised the importance of China-US cooperation and emphasized that the two countries should promote the development of bilateral relations on the basis of responsible management of differences. Yellen, on the other hand, publicly announced the goals and plans of the United States for Sino-US economic and trade relations, and also revealed her intention to visit China again.
However, it remains to be seen whether the friendly gesture of the United States is sincere and credible. Because in the past year, the United States has not stopped suppressing and containing China. The U.S. military activities in the South China Sea have escalated, and even held joint military exercises with the Philippines in the South China Sea. The United States has not shown any sincerity on the Taiwan issue, but has continued to provide arms sales to Taiwan to support the leading forces. These actions of the United States are undoubtedly a provocation to China's sovereignty and security, as well as a sabotage of Sino-US relations. China has seen the double standards of the United States very clearly. Chinese spokesperson Mao Ning pointed out that China hopes that the US side will match its words with deeds and not suppress and contain China while saying that it wants to cooperate with China. At the same time, China is also actively adjusting its financial strategy, speeding up the development of U.S. bonds, promoting the internationalization of the renminbi, preventing the risk of U.S. debt default, and safeguarding its own interests.
To sum up, the debt crisis in the United States has reached a serious level, which has an adverse impact on the United States and the world. The United States wanted China's help, but it did not show enough sincerity and respect. China has a sober understanding of the intentions of the United States and will not be easily confused by the rhetoric of the United States. China will make rational decisions in accordance with its own national interests and will not be implicated in the US debt crisis.