According to Beijing-based Dagong Global, Yes, the US is now a bigger debt risk than Russia and Botswana. The Chinese firm downgraded the US to BBB+ and gave it a negative outlook.
“In the political environment of factional rivalries, factional interests are prioritised, and it is hard for the [US] government to focus on the management of the national economy and social development,” the Chinese rating agency said.
While not directly controlled by the Chinese government, Dagong went on to say that the rating international rating system is flawed because of the dominance of Western agencies, such as Moody’s and Standard and Poor’s. China deserves its own voice in the market.
This downgrade came on the heels of a phone call between Chinese President Xi Jinping and President Trump.
According to the state news agency Xinhua, Xi told Trump the two nations should continue to cooperate and further open their markets to one another.
Dagong cited Trump’s new tax bill plan as a key reason for the downgrade, saying the plan would widen the US’s fiscal gap and thus make it more of a credit risk.
While few international investors track Dagong, the firm is believed to at least partially reflect the views of the Chinese government, the largest holder of US debt.
According to the US Department of Treasury, China held $1.19 trillion in US treasuries at the end of October 2017.
– Allen A Garzone II, Garzone Real Estate, Inc, Boston Real Estate Agent