China's Silence Amid U.S. Debt Expansion: A New Chapter in Global Relations

Amidst America's monumental tax cuts and safety net program cuts, China's unusual silence raises questions about its trust in U.S. fiscal stability.

The recent passage of a significant domestic policy bill by the House, which is expected to extend tax cuts and drastically cut social safety net programs, has spurred concerns about its long-term impact on the U.S. national debt. The budget office estimates that the bill, backed by President Trump, could introduce an astounding increase of at least $3.4 trillion to the national debt over the next decade.

As a key holder of U.S. debt for over twenty years, China has historically voiced its concerns about the financial behavior of Washington, often adopting a parental tone in its criticisms akin to that of a father warning a son against reckless spending. During pivotal moments such as the 2013 debt ceiling crisis, China urged the U.S. to act responsibly concerning its debt, and it also blamed the country for triggering the 2008 global financial crisis through excessive spending.

However, in stark contrast to past reactions, China has adopted a notably subdued stance amid recent discussions surrounding the colossal domestic bill. This silence raises eyebrows, considering the risks that such measures could pose to China's U.S. investments. Economists like Yasheng Huang from MIT express concern that the declining value of the dollar and uncertainties over U.S. adherence to its debt obligations deepen China's apprehensions about its financial stakes in American debt.

Reports from Chinese state media reveal their perspective on the ongoing discussions, portraying them as chaotic and divisive. Acknowledging the disarray within American democracy, these reports labeled the situation as a "political circus," highlighting doubts regarding the efficacy of a system that appears increasingly polarized and disconnected from the people's voice.