Richard Drew, Associated Press
BEIJING — Political leaders, investors and ordinary people Thursday welcomed the end of a U.S. government shutdown but already were looking ahead to the next round of a budget battle that brought the world's biggest economy close to default and threatens Washington's international standing.
The deal approved late Wednesday by Congress, with hours to go before the government reached its $16.7 trillion debt limit, only permits the Treasury to borrow through Feb. 7 and fund government through Jan. 15. The International Monetary Fund appealed to Washington for more stable long-term management of the nation's finances.
The standoff rattled global markets and threatened the image of U.S. Treasury debt as a risk-free place for governments and investors to store trillions of dollars in reserve. Few expected a default but some investors sold Treasurys over concern about possible payment delays and put off buying stocks that might be exposed to an American economic downturn.
IMF managing director Christine Lagarde welcomed the deal but said the shaky American economy needs more stable long-term finances.
"It will be essential to reduce uncertainty surrounding the conduct of fiscal policy by raising the debt limit in a more durable manner," Lagarde said in a statement.
The Tokyo stock market, Asia's heavyweight, gained 0.8 percent Thursday. Markets in South Korea, Australia and Southeast Asia also rose.
Such relief might be only temporary without a long-term settlement, said Standard Chartered economist Samiran Chakraborty in Mumbai.
"In three months' time, this could be back again," said Chakraborty. "If this kind of pushing it back happens several times, then this comfort that the markets had over the last 20 days that a deal will be reached, that comfort may now be dead."
Also, the congressional cliffhanger might dent longer-term confidence in American government debt, a cornerstone of global credit markets, prompting creditors to demand higher interest.
"With the U.S. government's antics, the risks go up, so the cost of money could go up too," said Nick Chen, managing partner of Taipei law firm Pamir Law Group.
Big Asian exporters including China and South Korea also faced the risk of a slump in global demand if a U.S. default had disrupted other economies.
China's government, Washington's biggest foreign creditor with $1.3 trillion invested in Treasurys, welcomed the end to the standoff.
"This issue concerns many countries in the world," said a foreign ministry spokeswoman, Hua Chunyin, speaking at a regular briefing. "The United States is the biggest economy in the world. For them to handle the issue properly is to their own interest and beneficial to their own development. We welcome their decision."
China's official Xinhua News Agency issued a scathing commentary accusing American leaders of failing to address chronic budget deficits. It said their deal only makes "the fuse of the U.S. debt bomb one inch longer."
"Politicians in Washington have done nothing substantial but postponing once again the final bankruptcy of global confidence in the U.S. financial system and the intactness of dollar investment," the commentary said.
Chen Ju, an employee at a Shanghai fast food company, said she sold stocks when she heard the U.S. government shut down. She said she was ready to get back into the market but would look for safety.
"I just think the U.S. is crafty. They released all kinds of information. It made me confused about what was true or not," said Chen.
In South Korea's capital Seoul, 26-year-old college senior Lee Boo-gun said he thought the U.S. economy was going belly up and was relieved to hear that a deal was reached.
- Insights from the Behavioral Science Guy:...
- Dave Ramsey says: Dave Ramsey: Pets and...
- David Muir takes over ABC's 'World News' from...
- About Utah: A Salt Lake hit for 152 years ......
- Some fear auto industry returning to bad habits
- Kennecott hopes project will change mountain...
- No timeline announced yet for Cottonwood Mall...
- Netflix unveils new way to share recommendations
- Kennecott hopes project will change... 7
- State lawmaker calling for criminal... 5
- Some fear auto industry returning to... 3
- Feds eye stricter rules for railroad... 2
- Obama promoting economic gains as... 2
- No timeline announced yet for... 2
- About Utah: A Salt Lake hit for 152... 2
- Dave Ramsey says: Dave Ramsey: Pets and... 2