HONG KONG — When the U.S. government was borrowing heavily four years ago to cover costs related to the global financial crisis, Wen Jiabao, then the prime minister of China, strongly and publicly warned Washington to make sure Chinese investments in Treasury securities were safe.
When Congress and the White House faced off two years ago over increasing the ceiling on the United States’ debt, raising worries about a possible default, Chinese Internet users poured scorn on their own government for having invested so much of their country’s savings in Treasuries.
The current round of brinkmanship between Republicans in Congress and the White House over avoiding a default on the national debt has led to considerably less hand-wringing in China or across Asia, although there were signs Thursday that this was starting to change.
The Chinese media have actively covered the standoff, and a vice minister of finance expressed concern about it Monday, but the Chinese Internet has not lit up with the same energy as during past budget struggles in Washington. China’s top leaders have stayed silent in public, but Prime Minister Li Keqiang raised the issue briefly in private with U.S. Secretary of State John Kerry on the sidelines of a meeting in Brunei on Thursday, according to a U.S. official and Chinese state media.
“We understand this is a crisis, but we think they will work out a deal,” said Sun Zhe, a politics professor at Tsinghua University who specializes in Chinese-American relations. “The Chinese people are also getting used to it.”
Stock markets in Asia have been mostly resilient over the last week, with a mixed performance Thursday. But there has been little sign of investors’ moving out of dollars and into yen or other Asian currencies as interest rates on short-term Treasury bills rise.
“The media is trying to get people interested in the possibility of a debt default, and the market isn’t interested,” said Marshall Mays, founder and managing director of Emerging Alpha Advisors, an asset management and advisory firm in Hong Kong that specializes in fixed-income markets and private equity. “Nobody believes it will happen.”
Mays predicted that Washington would find a way to avoid a debt default. “There are lots of accounting tricks, and just because the federal government is not good at accounting does not mean it can’t be done,” he said.
The same view is prevalent in Singapore and Tokyo. “The prospects of the U.S. not making payments on Treasury securities are effectively zero,” said Thomas Lam, the chief economist for industrialized nations at OSK-DMG, a Singapore investment bank and brokerage firm.
“This time, people are not so concerned with the default risk compared to 2011,” said Hajime Takata, the chief economist at the Mizuho Research Institute in Tokyo.