China has for the second successive day attacked the United States over the "fiscal cliff" drama, highlighting concerns of inflation returning to developing markets, financial volatility in global markets and the ceaseless ability of the world's largest economy to print its own currency.
In an English commentary on its website yesterday, Xinhua News Agency said that while US politicians have reached a budget deal, the chronic budget deficit and total debt of US$16.4 trillion (HK$127.92 trillion) is a "fiscal abyss."
The article appeared shortly before the US House of Representatives finally passed a budget deal a day after the deadline.
The bill received 257 "yea" votes to 167 "nays" after a tension-filled day on Capitol Hill. Incidentally, most Republicans voted against the bill.
The Biden-McConnell deal would permanently raise tax rates on annual income over US$400,000 for individuals and US$450,000 for families.
The deal will postpone spending cuts to avoid a sudden reduction of US$600 billion in deficits that could hurt the economy, while delaying the start of the US$1.2 trillion in automatic spending cuts over 10 years, known as the "sequester."
"The politicians have chosen to kick the can down the road again and again," Xinhua said.
"But as we all know, the can will never disappear. Sometime and somewhere, you might trip over it and fall hard on the ground, or in the US case, into an abyss you can never come out of."
"The `fiscal cliff' has long gone beyond the economic realm and become a `political cliff."'
Peter Lai Wing-leung, a director at DBS Vickers Securities, said: "[The latest attacks] show China, and in general other emerging markets, are worried that the United States is exporting inflation abroad by endlessly printing and borrowing money, thus creating problems for other countries to solve on their own."
A volatile US dollar will slow down reforms of the yuan, largely backed by the greenback.
China sits on the world's biggest foreign currency reserves, at US$3.3 trillion, and analysts estimate that as much as 70percent of this is invested in US dollar assets. It is also the biggest holder of US sovereign debt, at US$1.16 trillion, and at the same time a leading trading partner.