Chen Fengying, director of the Institute of World Economics of China Institute of Contemporary International Relations, pointed out that since China holds a large number of US Treasury bonds and US dollar assets, once the US Treasury bonds default, China's interests will undoubtedly be greatly threatened by the shrinking value.
In addition, China's economy is highly dependent on foreign countries, and the US market is the largest export market for China products. If the United States experiences financial turmoil and a sharp economic downturn due to the default of national debt, it will also have a great impact on the export of China enterprises. We should also be wary that once the US debt defaults, the dollar will further depreciate, triggering a new round of commodity price increases, thus further increasing the imported inflationary pressure in China.
It can be said that in the face of the risk of US debt default, the interests of the United States and China are the same, which is why China keeps increasing its holdings of US debt, and why US Secretary of State Hillary Clinton is busy going to China to give the China administration a "reassurance".
Mei Xinyu, a researcher at the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, suggested that China's reserve management department should make some emergency preparations: First, keep in touch with the US Treasury and put pressure on it. As the largest overseas creditor in the United States, China has the right and must do so in order to protect its own assets. Second, if the United States finally defaults on its debt, China should be prepared for the possible collapse of the international financial market. Third, we should reduce the purchase of other assets and enrich the composition of reserve assets, such as stocks and high-grade bonds of reputable enterprises and financial institutions, equity of a few hedge funds and investment companies and commodity futures contracts.