BEIJING (AFP) – Chinese media attacked the United States over its debt wrangling Friday, warning that lawmakers could depress the value of the dollar, fuel global inflation and plunge the world into another recession.
The United States must raise the $14.3 trillion debt ceiling by August 2 or risk defaulting on its repayment obligations, a move that would send seismic shocks through the global economy.
A default could hurt the US dollar and trigger a "torrential flood" of liquidity into the global economy, fuelling inflation in emerging economies such as China, the Communist Party mouthpiece People's Daily said Friday.
The report in the paper's overseas edition followed a stinging commentary by China's official Xinhua news agency accusing US lawmakers of being "dangerously irresponsible" and warning they risked "strangling the still fragile economic recovery".
"It is unfortunate and disappointing that when political leaders in Washington spar over who is doing good for their country, they take little account of the world's economic soundness," Xinhua said Thursday.
The report underscores growing anxiety in China over the health of the US economy, which is struggling to recover from the global crisis and is now locked in a bitter battle to raise the debt ceiling and avoid default.
China is by far the top holder of US debt with holdings at $1.16 trillion in May, according to the latest US data, and has raised concerns about its investment in the past.
The Chinese government has so far made no official comment on the latest crisis, but Xinhua is controlled by the state and its commentary is sure to have been officially sanctioned.
A US default could send the world into a recession "much nastier" than the 2008 crisis, Xinhua said on Thursday, urging lawmakers to finish "their political jockeying" and "restore international investor confidence".
"The potential collateral damage is way too heavy," Xinhua said, adding it was time for Washington to "revisit the time-tested common sense that one should live within one's means".
In a separate report, Xinhua said lawmakers on both sides of the debate were "wasting precious time on finger-pointing, public showdowns and tough backdoor bargains" to get the best deal for their parties.
US Republicans were forced to abandon a vote late Thursday on a plan to raise the debt ceiling enough to avert default for at least six months because party leaders were unable to garner enough support from their own members.
Democrats have rallied behind a rival plan that would cut spending by $2.2 trillion over 10 years, and raise the debt ceiling until after the November 2012 presidential elections.
China's foreign exchange regulator last week called on the US to protect investor interests as lawmakers remained at odds over how to slash the country's deficit.
Beijing has previously warned that the massive US stimulus effort launched to revive the economy after the global downturn would lead to mushrooming debt that erodes the value of the dollar and its Treasury holdings.
NEW DELHI (AFP) – India expects to make a first payment to Iran through Turkey for billions of dollars in unpaid crude oil bills as it seeks to avert a cut-off in fuel shipments, the oil minister said Friday.
Tehran warned late last month it would halt exports to India from next month unless the payments dispute was resolved.
Oil Minister S. Jaipal Reddy said New Delhi expects to pay via Turkey the first tranche of arrears to Iran, which supplies 12 percent of energy-hungry India's crude needs.
However, Reddy told reporters in New Delhi "we can't fix time frames" in response to queries about when an alternate payment mechanism would be finalised to pay the bills which total at least $5 billion.
India is Iran's second largest client after China and absorbs about 20 percent of its crude exports.
But Indian firms have been struggling for more than six months to pay Tehran due to international banking sanctions imposed on the Islamic republic over its nuclear programme.
Reddy added he was hopeful Iran would continue to supply crude to India in August, but added New Delhi has already lined up alternative arrangements with other crude suppliers as a contingency measure.
The Financial Times quoted a senior Iranian oil official earlier this week as saying Tehran would continue crude exports as the two countries were seeking to work out payment methods through new accounts and barter deals.
Rupee accounts could help pay the cost of Iran's imports from India which include steel, food and electronic goods, the Financial Times said.
Earlier this week, Saudi Arabia agreed to sell three million barrels of extra crude oil to India to offset a possible supply cut, the Press Trust of India reported.
Annual trade between India and Iran stands at an estimated $12 billion, with India purchasing about 400,000 barrels of Iranian crude per day.
The Financial Times said if payment was arranged through barter deals, it would be the first time since the 1980-88 Iran-Iraq war that the Islamic republic had used such a means to be paid for its oil exports.
Reddy said earlier this month alternative supplies were being arranged from countries such as Saudi Arabia, Kuwait and Iraq as well as from Latin America.
-- Dow Jones Newswires contributed to this story --
PARIS (Reuters) – EADS, whose Airbus unit has outpaced U.S. rival Boeing in the battle for plane orders so far this year, forecast a significant rise in operating profit next year as demand for aircraft grows.
EADS predicted Airbus would sell more than 1,000 planes in 2011, helped by a decision to revamp its single-aisle A320 series to use less fuel that gave it a headstart over Boeing in the best-selling jetliner segment.
The group posted forecast-beating second-quarter results on Friday, as did Boeing two days earlier, and raised its free cash flow target for the year to around 1 billion euros ($1.44 billion), excluding spending on acquisitions.
EADS said it still expected 2011 operating profit before one-offs to remain stable year-on-year at around 1.3 billion euros. Earnings per share could lag or exceed last year's depending on the euro's strength against the dollar.
But for 2012, the group expects a "significant improvement" in its earnings before interest and tax and one-offs thanks to "higher volume, better pricing and improvement of A380 (superjumbo) performance at Airbus," EADS added.
"They are rather confident on the level of orders, so they are raising their free cash flow target quite considerably," Oddo analyst Yan Derocles said. EADS said it had net cash of 11 billion euros as of June 30.
EADS shares were 1 percent higher at 24.53 euros by 0925 GMT, outperforming a 0.7 percent weaker French blue-chip CAC-40 index.
EADS generates around 70 percent of sales at its Airbus division, with the rest fairly evenly split between its helicopter, space and defense businesses. EADS is chipping away at its cash pile to fund acquisitions as it looks to rebalance its portfolio and reduce its exposure to the euro.
The group said quarterly earnings before interest and tax (EBIT) rose 15 percent to 371 million euros in the three months to June 30, while sales rose 6 percent to 12.1 billion.
EADS had been expected to post EBIT of 317 million euros, down from 323 million a year ago, on sales of 11.6 billion in the second quarter, according to a Reuters analyst poll.
"Our results for the first half of 2011 mirror the strong demand in the commercial aviation sector," Chief Executive Louis Gallois said.
Boeing, which splits its business more evenly between commercial aircraft and defense, on Wednesday posted forecast-beating quarterly profit on strong sales of its commercial airplanes, cost management and a good mix of deliveries of its defense products.
It also raised its 2011 earnings forecast.
Airbus showed that a bet on a re-engined version of its A320 family, known as the A320neo, had paid off as it picked up hundreds of orders for the aircraft at last month's Paris Air Show.
Boeing had wanted to take more time to weigh whether to put more fuel-efficient engines on its competing 737 or whether to redesign it.
But after Airbus' air show wins and when loyal Boeing customer AMR Corp's American Airlines threatened to give an entire narrow-body order to Airbus, Boeing bowed to pressure and opted for a re-engined 737.
Airbus still won a large chunk of the American Airlines order, giving it a major boost in the U.S. market as carriers prepare to replace aging fleets.
EADS said Airbus should deliver 520 to 530 aircraft this year, including around 25 A380 superjumbos, helping revenue exceed last year's level.
Boeing this week trimmed its delivery forecast slightly to 485-495 commercial aircraft from 485-500.
Planemakers receive downpayments when orders are confirmed but airlines hand over the bulk of the price on delivery.
(Reporting by James Regan; Editing by Christian Plumb and Erica Billingham)