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China, the largest foreign holder of U.S. government debt, said the U.S. needs to "cure its addiction to debts" following the S&P downgrade and called for a new global stable reserve currency.
China, the largest foreign holder of U.S. government debt, has criticized the U.S.'s financial management following the Standard and & Poor's downgrade and called for a new global stable reserve currency.
(GlobalPost reports: S&P downgrades U.S. credit rating)
The U.S. needs to "cure its addiction to debts," said via the New China News Agency, known as Xinhua, the LA Times reports.
The U.S. should apply "common sense" and make "substantial" cuts to the "gigantic military expenditure and bloated social welfare costs" in order to prevent future downgrade, Beijing reportedly said in its Xinhua commentary.
"China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets," it continued.
"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone."
China warned that further credit downgrades would likely undermine the world economic recovery and trigger fresh rounds of financial turmoil, the Telegraph reports.
The credit rating downgrade is expected to prompt China to accelerate the diversification of its holdings.
In addition to its $1.2 trillion in U.S. treasuries, an estimated two-thirds of China's $3.2 trillion in foreign exchange reserves is estimated to be in dollars.
China most recently voiced concern about its dollar investments on Wednesday, when China's central bank government urged the U.S. to avoid a default and cut its deficit, according to the LA Times.