August 1st, 2011
08:43 PM GMT
Beijing (CNN) Once U.S. President Obama announced the bipartisan debt deal Sunday, investors in Asia breathed a sigh of relief. Tokyo led the region's markets higher as the U.S. dollar strengthened against the Japanese yen.
Policymakers such as Japanese Chief Cabinet Secretary Yukio Edano welcomed the news, saying the last minute agreement would "lead to the stabilisation of the markets" because it helped the U.S. avoid default on August 2.
Good news for now but how has the political show on Capitol Hill affected America's reputation as a leader in the global economy?
China's state-run news agency Xinhua published an editorial recently to this point saying the U.S. was playing a "game of chicken" with the world economy. The article said, "With leadership comes responsibility. It is unfortunate and disappointing that when political leaders in Washington spar over who is doing good for their country, they take little account of the world's economic soundness." Referring to the symbols of the American political parties, the editorial said, the potential collateral damage is too heavy "when the donkey and the elephant fight."
China has a lot at stake in this game. It is the largest foreign holder of U.S. debt and sells a lot of its goods to American consumers.
However, some analysts here say the lesson China should learn from the debt ceiling debate is that it needs to reduce its exposure to the risks - by diversifying its U.S. holdings and perhaps by finally pushing ahead with leadership pledges of its own to cut the reliance on exports and balance the nation's economic growth.
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