CCTV.com - CNTV English - CCTV News

U.S. debt deal raises future concerns

08-03-2011 08:38 BJT

Watch Video

Play Video

Well, Junfeng, it looks like the fat lady was warming up her voice and ready to sing. Finally, a last minute deal by US lawmakers to raise the debt ceiling, but really, she's not gonna sing yet. It's just the end of act 1 isn't it?

That's right. Investors are still on the edge of their seats, awaiting the next act. They pushed down Asian markets yesterday. And Act 1 is dramatic enough for China - the largest US debt holder - it's gotta reconsider its asset safety.

CCTV reporter, Ai Yang breaks down the story for us, so far.

In a few hours time, the US is expected to announce yet another raise of its debt ceiling. If the plan goes through as expected, it will push back the prospect of a US debt default until at least after the 2012 mid-term election. As for now, the proposed deal would increase the country's 14.3 trillion dollar borrowing cap by 2.4 trillion. But the relief is feared to be short-lived.

Obama signed the bill into law and said the emergency bill was a first step towards ensuring the country lives within its means, but he also insists more is needed to rebuild the US economy.

Qin Guolou, economist from China Everbright Group. Ltd. said, "The problem is far from being solved. The US debt crisis has worsened, especially in recent years. Raising the debt ceiling allows them to borrow more, but it also means the country will owe even more."

The government is also expected to cut more than 2 trillion US dollars in federal spending over the next ten years. This is a compromise earned after some difficult negotiations between the Democrats and the Republicans.

Meanwhile, uncertainty over enforcement mechanisms has caused further worries.

Qin said, "In the coming ten years, social welfare and medicare among other things are most likely to suffer from cuts, and these changes will be directly felt by many poor people."

In the past 50 years, the US debt ceiling has risen more than 70 times, mostly without commotion. However, at a time when the US economy's growth rate is extremely low (0.4-1.3 first and second quarter), and unemployment rates are at a record high (9.2 percent), panic is on the rise. On the other hand, competition between the Democrats and the Republicans in the mid-term elections has further increased tensions.

Qin said, "The political battle is a domestic affair, but it has sent shock waves around the world."

Editor:Li Wanran |Source: CNTV.CN

Hot Videos view more

The celebrations are still continuing as the victorious coach, Joachim Loew, has been honored for his achievement in his hometown of Freiburg.
Germany coach Loew honored in hometown of Freiburg

Chinese men´s national team continued its preparations for next year´s Asian Cup, as they managed a one-all draw against visitors Jordan during a football friendly in Harbin, the capital city of Northeast China´s Heilongjiang Province.
China held to 1-1 draw by Jordan

The defending world champs came into the contest with a perfect 6-and-oh record, but they would be in for a tough first half before opening things up in the second.
USA beat Slovenia 119-76 in quarter-finals

Hot Stories more

UK authorities believe killer of James Foley is a British national

Across the UK the hunt is on for James Foley’s killer, who authorities believe is a British national. As Richard Bestic reports from London, Prime Minister David Cameron cut short his summer break to lead his government’s response.

Israeli war jets renews Gaza strike as truce talks stalled

Three Palestinians were killed and 40 others wounded in the intensive Israeli war jets´ airstrikes on the Gaza city on Tuesday night, shortly before an end of a 24-hour ceasefire in the Gaza Strip,

Missouri police arrest dozens after violent night

As the protests in the town of Ferguson, Missouri turned violent with police facing ´heavy gunfire´ from some ´criminal elements´, cops fired tear gas, stun grenades and arrested 31 demonstrators on Monday night.

Picture in news more

More Video News

Choose TV Program