China's Dagong downgrades U.S. from A+ to A
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China.org.cn, August 3, 2011
Chinese credit rating agency Dagong Global Credit Rating Co. Ltd. Wednesday cut the sovereign credit rating of the United States from A+ to A with a negative outlook following U.S. president Barack Obama announced an increase of the country's debt limit.
Although the new bill made it possible for the US government to borrow new money to pay off old debts, it will not change the fact that the U.S. national debt growth has surpassed that of its overall economy and fiscal revenue, which has led to a decline in its debt-paying ability, said Dagong.
The U.S. House of Representatives Monday passed legislation to raise the U.S. debt limit by at least US$2.1 trillion and cut federal spending by US$2.4 trillion, by a vote of 269 to 161.
The fights between U.S. political parties over debt issues has reflected the government's inability to completely solve the debt problem and the lack of political and economic systematic protection on the interests of its creditors, said Dagong.
China is currenly the largest holder of U.S. treasury debt, with holdings standing at US$1.15 trillion by the end of April.
Dagong announced last month that it had put the U.S. credit rating on negative watch for a possible downgrade on expectations that the country could face a long-term economic recession.
Dagong downgraded the U.S. rating from AA to A+ in last November after the U.S. government announced a second round of quantitative easing program.
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