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Measured action needed to address US debt issue

By Shen Dingli (Global Times)

10:16, October 20, 2011

The US national debt is precariously high, at around the same level as the country's annual GDP.

This situation is of great concern to China, as the two countries are heavily involved in bilateral trade.

However, I would argue that the US debt problem is not so severe as the media makes out, although China could still act to reduce the risk of a future calamity caused by the economic interdependency of the two countries.

Given the continuing imbalance of the US federal budget, America runs the risk of failing to pay its debts on time, and has needed to borrow to meet the obligations of its existing debt. This threat of snowballing debt, unbalanced budgeting and congressional partisan rivalry have resulted in the country's credit rating being downgraded by Standard & Poor's.

Presently, America is experiencing one of its hardest times in history. The previous Republican administration initiated an unwarranted war in Iraq, plus another expensive undertaking in Afghanistan, costing several trillions of dollars.

However, there is still hope that the US can turn around its situation.

First, US national wealth has been increasing over the past 10 years, and its GDP rose by nearly 50 percent, despite waging two wars thousands of miles away from home. One should never underestimate the US capacity to generate wealth.

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