China, the largest creditor of the world's sole superpower, hit out at the United States for its "debt addiction" and "short sighted" political wrangling in response to Standard & Poor's historic decision to downgrade the U.S. credit rating from AAA to AA+.
"China has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," China's official news agency Xinhua said in a commentary, Reuters reported.
"International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.
Standard and Poor's (S&P), one of the Big Three ratings agencies, has downgraded the U.S. from its AAA rating by one notch to AA+, saying that in its opinion, a recently passed deficit cutting plan by the U.S. government fell short of the goal of stabilizing the government's medium-term debt dynamics.
"The downgrade reflects our view that the effectiveness, stability, and predictability of American policy making and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011," S&P said in a report.
The outlook on the long-term rating was also listed as negative and the rating could fall further.
"We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case," the report stated.
The ratings agency has warned the U.S. government several times previously that if it does not come up with a credible plan to meaningfully reduce the deficit, a downgrade would be possible.
Treasury officials even asserted that S&P's projections had a math error. The U.S. treasury department attacked S&P’s decision to downgrade the country’s AAA rating, saying that there is a $2 trillion error in the credit rating agency's analysis.
"A judgment flawed by a $2 trillion error speaks for itself," a Treasury spokesman said to FOX News Channel.
Whatever the case, the sterling reputation the U.S. has enjoyed for 70 years is now history.