China urges US to protect investors (AFP)

BEIJING (AFP) – China on Thursday urged Washington to protect the interests of investors, after ratings agency Moody's placed the United States's triple-A debt rating on a downgrade watch.

China is by far the top holder of US debt, with holdings at $1.153 trillion in April according to US data.

"We hope the US government adopts responsible policy and measures to ensure the interests of investors," said foreign ministry spokesman Hong Lei.

Moody's Investor Service said Wednesday it had placed the United States' triple-A rating on a downgrade watch because of rising prospects the US debt limit will not be raised in time to avoid default.

The announcement came as US lawmakers try to hammer out a deal that would allow President Barack Obama to raise the country's debt ceiling to allow it to meet its repayment obligations.

Republicans are refusing to lift the country's $14.29 trillion debt ceiling without deep government spending cuts, while they reject Democrats' demand that tax increases must be part of any sweeping deficit reduction plan.

A downgrade could sharply raise US borrowing costs, worsening the country's already dire fiscal position, and send shock waves through the financial world, which has long considered US debt a benchmark among safe-haven investments.

China has in the past raised worries 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.

Beijing had been cutting its holdings of US Treasurys for five months in a row until March. The figure only increased slightly in April from $1.145 trillion in the previous month, US data showed.

The foreign ministry's comments came after Chinese credit ratings agency Dagong said Thursday it had also put US sovereign debt on negative watch for a possible downgrade.

Dagong said the ability of the United States to repay debt was likely to decline given its economic growth was expected to slow and fiscal deficits to remain high in the next couple of years.

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Vatican adviser urges tougher stance with China (AP)

By NICOLE WINFIELD and RACHEL ZOLL, Associated Press Nicole Winfield And Rachel Zoll, Associated Press – Thu?Jul?14, 2:25?pm?ET

ROME – A top Vatican adviser urged the Holy See on Thursday to take a harder line against China's illicit ordinations of bishops, saying Rome's current policy of compromise isn't working.

Hong Kong Cardinal Joseph Zen denounced the third such ordination in eight months, which occurred earlier Thursday. The Rev. Joseph Huang Bingzhang was consecrated as bishop of Shantou, according to Liu Bainian, honorary president of the Chinese Catholic Patriotic Association, which runs China's Catholic churches.

The ordination deepened a standoff in which the Vatican insists the pope has sole right to appoint bishops and Beijing's Communist leaders see that position as foreign interference in their internal affairs.

Zen spoke in New York, where he was meeting with Chinese Catholic communities, and held a news conference to condemn the illicit ordinations. He questioned whether top Chinese officials were really behind them, suggesting they were more likely the work of Patriotic Association officials.

"At this moment, it's a war," Zen said.

On Wednesday, Zen took out a half-page advertisement in Hong Kong's mass-market Apple Daily newspaper to issue an "urgent appeal" to Chinese President Hu Jintao and Premier Wen Jiabao.

Zen urged the two Chinese leaders to restrain "rogue public servants" who are "using violence to assist scum inside the church to force bishops, priests, and followers to do things against their consciences."

Beijing severed ties with the Holy See in 1951 after the Communist Party took power and set up its own church outside the pope's authority.

Faithful on the mainland are allowed to worship only with the state-sanctioned church, which recognizes the pope as a spiritual leader but rejects his authority to appoint priests and bishops. A thriving underground following remains loyal to the Vatican.

Pope Benedict XVI has prioritized improving relations with Beijing and reconciling the two churches. In recent years a compromise had been reached under which both Beijing and Rome agreed on bishop candidates.

But the agreement seems to have fallen apart in recent months.

The Vatican was furious over the ordinations of the Rev. Guo Jincai in Chengde city in November and the Rev. Paul Lei Shiyin in Sichuan province just two weeks ago. It does not recognize them as bishops.

In June, the Patriotic Association said it had to urgently fill more than 40 empty bishops' seats because the vacancies were causing serious problems in the handling of church affairs.

Zen said "because of the attitude of compromise," the Vatican had been willing to accept candidates for ordination who were not really loyal to the Holy See in their hearts. He said previously, candidates had to join the Patriotic Association but "in heart" were aligned with Rome.

"Unfortunately, the Holy See was very reluctant to take action because they want to appease the Beijing government," Zen said.

On Thursday, Vatican spokesman the Rev. Federico Lombardi told reporters the Chinese ordination caused "pain and concern" at the Vatican.

"The position and feelings of the Holy See and the pope have already been expressed in previous recent circumstances," Lombardi said.

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Zoll reported from New York; Louise Watt in Beijing and Alessandra Rizzo in Rome contributed.

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