http://www.bloomberg.comOct 15, 2013

China Says Debt Debacle Is the End of Pax Americana
By Adam Minter

Excuse the Chinese government for not caring who in the U.S. is responsible for the debt-ceiling impasse. Democrats and Republicans have their reasons for doing what they do, but from Beijing or Shanghai’s perspective, the potential results are the same: a default on about $1.28 trillion of Chinese-owned debt and a global recession to boot. The U.S. promised to make good on the debt when it bought it, and that promise seems dangerously close to being broken. For China, that’s a huge economic risk -- and a tremendous public-relations opportunity.

In recent days, it’s become clear that China’s state-owned newspaper editorialists -- all of whom take their cue, at some level, from the Communist Party -- view the American crisis as a teaching moment. It’s traditional for Chinese news media to play this role. Senior Communist Party officials rarely make statements on contemporary events (especially crises), and the debt-ceiling impasse is no exception.

High-ranking government officials, perhaps wary of spooking already rattled markets at home and abroad, have said little or spoken in generalities. Last week, Premier Li Keqiang voiced concern about the debt-ceiling issue in a conversation with U.S. Secretary of State John Kerry, according to the state-owned Xinhua News Agency. The highest-ranking Chinese official to comment publicly on the Washington stalemate in recent days was probably Zhu Guangyao, the country’s vice minister of finance, and his finely crafted words are nearly void of content. On Tuesday in Beijing, he offered mere platitudes: “In the long run, the United States must address the fiscal stalemate, must raise the cap of the debt limit soon as to keep the promise of no default of its Treasury bonds and keep the sound momentum of the U.S. economy and avoid dragging down the world economy.”

China’s leaders are certainly interested in commenting on the situation in Washington; they just prefer to do it through state-owned media outlets. Two editorials published in recent days by two of China’s most powerful (and distinct) news organizations exemplify a quiet cop/loud cop approach.

Xinhua was first, with a Sunday editorial in the English-language edition of the hard-line Global Times. The message of the editorial -- which carried the headline “US fiscal failure warrants a de-Americanized world” -- is that the debt stalemate should rally the global community to build a post-Pax Americana world order. The piece reads like the primal scream of a fed-up hegemonist-to-be: “Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.”

Among these interests, the editorial lists respect for national sovereignty (a particularly sensitive issue in China, in light of its relationship with Taiwan) and a commitment not to interfere in others’ domestic affairs. The editorial also suggests that the world financial system needs to be reformed. A new international currency may need to replace the dollar, “so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.”

These are provocative words of the sort that China’s cautious leadership would never dare utter. Indeed, Xinhua’s editorial appears to have been issued in English only, its call for a “de-Americanized” world absent from Chinese news or social media, where the editorial hasn’t generated any noticeable discussion (perhaps because it’s in English).

Why this move? For starters, an English-language editorial allows Xinhua to distance the Chinese leadership -- whether or not it helped conceive of the piece -- from the written sentiments while maintaining the imprimatur of an “official” editorial. Whose piece is it? As with almost any unsigned editorial in the state-run Chinese media, the lack of a straightforward answer gives everyone -- Party leadership, Xinhua, whoever wrote the editorial -- plausible deniability in the event someone suggests they believe the piece’s message. This is exactly what the New York Times did when it claimed, based on the editorial, that “Chinese leaders” were calling for the consideration of a de-Americanized world. Objectively viewed, the leadership did no such thing (though the article subsequently attributes quotes from the editorial to Xinhua). Perhaps fighting back against such broad characterizations, on Wednesday the English-language China Daily ran the editorial bearing the byline of Liu Chang.

An English-only editorial also highlights the fact that Xinhua wanted its message heard by a foreign audience (all the while neglecting a Chinese audience that hasn’t, so far, seemed very engaged with the issue, at least on Chinese microblogs). And judging from the outpouring of references to a “de-Americanized world” since Sunday, Xinhua succeeded spectacularly.

What was the message, then, for the Chinese-speaking world? On Monday, the People’s Daily newspaper, the self-proclaimed mouthpiece of the Communist Party (and the most reliable indicator of party leadership’s opinion), offered a low-key editorial with a simple message: “It’s obvious that the U.S. political system has a problem.” The nature of that problem, as analyzed by the paper, is that the U.S. system has stagnated in the face of a polarized society and is unable to adapt to new realities. “Advocates for the U.S. political system argue that its checks and balances give it the ability to self-correct and helps to stem large political errors,” the paper explained. “However, when such a system exacerbates social rifts, party opposition, and even disrupts the normal life of the country, rational reflection is necessary.”

This Chinese-language editorial’s call for reflection isn’t directed at just Americans. The piece is also a not-so-subtle call for Chinese to reflect on whether they want such a troubled system adapted to their country. The answer, from the editorial’s perspective, is left to the reader.

Even before the People’s Daily editorial, there was plenty of evidence on Chinese microblogs that readers didn’t buy the argument. In fact, some netizens are actually suggesting that the impasse demonstrates the strength of the U.S. political system. That’s an interesting contention -- perhaps even a powerful one, so long as those in Washington find a last-minute way for the U.S. to meet its debt obligations. But as the U.S. creeps closer to defaulting, the arguments about the relative merits of the American political system start to tilt in favor of China’s unfriendly critiques.