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May 23, 2023
China Fears U.S. Debt Default as Much as Anyone
Journalist John Feng
Emily Jin, a research assistant at the Center for a New American Security, told Newsweek: "The U.S. debt ceiling—and how close the U.S. is to breaching it—is a metric for U.S. immediate-term economic stability."
"Defaulting on the debt would have immediate negative consequences for the U.S. economy. However, continuously raising the debt ceiling without implementing sustainable economic growth measures poses long-term risks to the U.S. economy," she said.
For the time being, said Jin, it remains in China's national interest "to protect the value of its significant holdings in U.S. assets, as they make up a substantial portion of China's foreign exchange reserves."
China's holdings of U.S. long-term securities—including Treasury bills, agency bonds, corporate and other bonds, and corporate entity stocks—total $1.42 trillion, according to Jin's analysis of recent Treasury Department data.
Read the full story and more from Newsweek.