China Fears U.S. Debt Default as Much as Anyone

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.

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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.

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